Correlation Between NYSE Composite and Putnam Focused
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Putnam Focused 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 NYSE Composite and Putnam Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Putnam Focused Equity, you can compare the effects of market volatilities on NYSE Composite and Putnam Focused 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 NYSE Composite with a short position of Putnam Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Putnam Focused.
Diversification Opportunities for NYSE Composite and Putnam Focused
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Putnam is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Putnam Focused Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Equity and NYSE Composite 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 NYSE Composite are associated (or correlated) with Putnam Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Focused Equity has no effect on the direction of NYSE Composite i.e., NYSE Composite and Putnam Focused go up and down completely randomly.
Pair Corralation between NYSE Composite and Putnam Focused
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.2 times less return on investment than Putnam Focused. But when comparing it to its historical volatility, NYSE Composite is 1.27 times less risky than Putnam Focused. It trades about 0.15 of its potential returns per unit of risk. Putnam Focused Equity is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,424 in Putnam Focused Equity on September 2, 2024 and sell it today you would earn a total of 537.00 from holding Putnam Focused Equity or generate 15.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Putnam Focused Equity
Performance |
| Timeline |
NYSE Composite and Putnam Focused Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Putnam Focused Equity
Pair trading matchups for Putnam Focused
Pair Trading with NYSE Composite and Putnam Focused
The main advantage of trading using opposite NYSE Composite and Putnam Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Putnam Focused 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 Focused will offset losses from the drop in Putnam Focused's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Putnam Focused vs. Putnam Equity Income | Putnam Focused vs. Putnam Tax Exempt | Putnam Focused vs. Putnam Floating Rate | Putnam Focused 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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