Correlation Between Needham Aggressive and Putnam High
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Putnam High 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 Needham Aggressive and Putnam High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Aggressive Growth and Putnam High Yield, you can compare the effects of market volatilities on Needham Aggressive and Putnam High 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 Needham Aggressive with a short position of Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Putnam High.
Diversification Opportunities for Needham Aggressive and Putnam High
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Putnam is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Putnam High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Yield and Needham Aggressive 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 Needham Aggressive Growth are associated (or correlated) with Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Yield has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Putnam High go up and down completely randomly.
Pair Corralation between Needham Aggressive and Putnam High
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 4.68 times more return on investment than Putnam High. However, Needham Aggressive is 4.68 times more volatile than Putnam High Yield. It trades about 0.09 of its potential returns per unit of risk. Putnam High Yield is currently generating about 0.13 per unit of risk. If you would invest 3,026 in Needham Aggressive Growth on September 12, 2024 and sell it today you would earn a total of 2,125 from holding Needham Aggressive Growth or generate 70.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Putnam High Yield
Performance |
| Timeline |
| Needham Aggressive Growth |
| Putnam High Yield |
Needham Aggressive and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Putnam High
The main advantage of trading using opposite Needham Aggressive and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Putnam High 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 High will offset losses from the drop in Putnam High's long position.| Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. HUMANA INC | Needham Aggressive vs. Barloworld Ltd ADR |
| Putnam High vs. Intal High Relative | Putnam High vs. Ab Global Risk | Putnam High vs. Needham Aggressive Growth | Putnam High vs. Ppm 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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