Correlation Between Lifestyle and Putnam Retirement
Can any of the company-specific risk be diversified away by investing in both Lifestyle and Putnam Retirement 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 Lifestyle and Putnam Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and Putnam Retirement Advantage, you can compare the effects of market volatilities on Lifestyle and Putnam Retirement 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 Lifestyle with a short position of Putnam Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Putnam Retirement.
Diversification Opportunities for Lifestyle and Putnam Retirement
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lifestyle and Putnam is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Putnam Retirement Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Retirement and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with Putnam Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Retirement has no effect on the direction of Lifestyle i.e., Lifestyle and Putnam Retirement go up and down completely randomly.
Pair Corralation between Lifestyle and Putnam Retirement
Assuming the 90 days horizon Lifestyle is expected to generate 3.61 times less return on investment than Putnam Retirement. But when comparing it to its historical volatility, Lifestyle Ii Moderate is 1.91 times less risky than Putnam Retirement. It trades about 0.01 of its potential returns per unit of risk. Putnam Retirement Advantage is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,199 in Putnam Retirement Advantage on October 19, 2024 and sell it today you would earn a total of 4.00 from holding Putnam Retirement Advantage or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. Putnam Retirement Advantage
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| Putnam Retirement |
Lifestyle and Putnam Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Putnam Retirement
The main advantage of trading using opposite Lifestyle and Putnam Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Putnam Retirement 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 Retirement will offset losses from the drop in Putnam Retirement's long position.| Lifestyle vs. Delaware Healthcare Fund | Lifestyle vs. Blackrock Health Sciences | Lifestyle vs. Allianzgi Health Sciences | Lifestyle vs. Live Oak Health |
| Putnam Retirement vs. Putnam Equity Income | Putnam Retirement vs. Putnam Tax Exempt | Putnam Retirement vs. Putnam Floating Rate | Putnam Retirement vs. Putnam High Yield |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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