Correlation Between Meridian Small and Putnam Growth
Can any of the company-specific risk be diversified away by investing in both Meridian Small and Putnam Growth 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 Meridian Small and Putnam Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Small Cap and Putnam Growth Opportunities, you can compare the effects of market volatilities on Meridian Small and Putnam Growth 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 Meridian Small with a short position of Putnam Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Small and Putnam Growth.
Diversification Opportunities for Meridian Small and Putnam Growth
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meridian and Putnam is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Small Cap and Putnam Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Growth Opport and Meridian Small 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 Meridian Small Cap are associated (or correlated) with Putnam Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Growth Opport has no effect on the direction of Meridian Small i.e., Meridian Small and Putnam Growth go up and down completely randomly.
Pair Corralation between Meridian Small and Putnam Growth
Assuming the 90 days horizon Meridian Small is expected to generate 1.06 times less return on investment than Putnam Growth. But when comparing it to its historical volatility, Meridian Small Cap is 1.02 times less risky than Putnam Growth. It trades about 0.09 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,253 in Putnam Growth Opportunities on September 1, 2024 and sell it today you would earn a total of 906.00 from holding Putnam Growth Opportunities or generate 14.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Small Cap vs. Putnam Growth Opportunities
Performance |
| Timeline |
| Meridian Small Cap |
| Putnam Growth Opport |
Meridian Small and Putnam Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Small and Putnam Growth
The main advantage of trading using opposite Meridian Small and Putnam Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Small position performs unexpectedly, Putnam Growth 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 Growth will offset losses from the drop in Putnam Growth's long position.| Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Growth Fund | Meridian Small vs. Meridian Equity Income |
| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Multi Cap Growth | Putnam Growth vs. Putnam Global Health | Putnam Growth vs. Putnam International Equity |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |