Correlation Between John Hancock and Putnam Dynamic
Can any of the company-specific risk be diversified away by investing in both John Hancock and Putnam Dynamic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining John Hancock and Putnam Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Funds and Putnam Dynamic Asset, you can compare the effects of market volatilities on John Hancock and Putnam Dynamic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in John Hancock with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and Putnam Dynamic.
Diversification Opportunities for John Hancock and Putnam Dynamic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Putnam is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Funds and Putnam Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Dynamic Asset and John Hancock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on John Hancock Funds are associated (or correlated) with Putnam Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Dynamic Asset has no effect on the direction of John Hancock i.e., John Hancock and Putnam Dynamic go up and down completely randomly.
Pair Corralation between John Hancock and Putnam Dynamic
Assuming the 90 days horizon John Hancock is expected to generate 1.56 times less return on investment than Putnam Dynamic. But when comparing it to its historical volatility, John Hancock Funds is 1.39 times less risky than Putnam Dynamic. It trades about 0.34 of its potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,727 in Putnam Dynamic Asset on September 3, 2024 and sell it today you would earn a total of 64.00 from holding Putnam Dynamic Asset or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Funds vs. Putnam Dynamic Asset
Performance |
| Timeline |
| John Hancock Funds |
| Putnam Dynamic Asset |
John Hancock and Putnam Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and Putnam Dynamic
The main advantage of trading using opposite John Hancock and Putnam Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, Putnam Dynamic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Putnam Dynamic will offset losses from the drop in Putnam Dynamic's long position.| John Hancock vs. Vanguard Lifestrategy Moderate | John Hancock vs. Vanguard Lifestrategy Income | John Hancock vs. Vanguard Lifestrategy Growth | John Hancock vs. Vanguard Explorer Fund |
| Putnam Dynamic vs. T Rowe Price | Putnam Dynamic vs. Franklin Lifesmart 2050 | Putnam Dynamic vs. John Hancock Funds | Putnam Dynamic vs. T Rowe Price |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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