Correlation Between Putnam Dynamic and Putnam Equity

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Putnam Dynamic and Putnam Equity 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 Putnam Dynamic and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Dynamic Asset and Putnam Equity Income, you can compare the effects of market volatilities on Putnam Dynamic and Putnam Equity 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 Putnam Dynamic with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Dynamic and Putnam Equity.

Diversification Opportunities for Putnam Dynamic and Putnam Equity

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Putnam and Putnam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Dynamic Asset and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Putnam Dynamic 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 Putnam Dynamic Asset are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Putnam Dynamic i.e., Putnam Dynamic and Putnam Equity go up and down completely randomly.

Pair Corralation between Putnam Dynamic and Putnam Equity

Assuming the 90 days horizon Putnam Dynamic Asset is expected to generate 0.3 times more return on investment than Putnam Equity. However, Putnam Dynamic Asset is 3.32 times less risky than Putnam Equity. It trades about 0.1 of its potential returns per unit of risk. Putnam Equity Income is currently generating about -0.25 per unit of risk. If you would invest  1,780  in Putnam Dynamic Asset on September 12, 2024 and sell it today you would earn a total of  15.00  from holding Putnam Dynamic Asset or generate 0.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Putnam Dynamic Asset  vs.  Putnam Equity Income

 Performance 
       Timeline  
Putnam Dynamic Asset 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Dynamic Asset are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Putnam Equity Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Putnam Equity Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnam Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Dynamic and Putnam Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Putnam Dynamic and Putnam Equity

The main advantage of trading using opposite Putnam Dynamic and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Dynamic position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.
The idea behind Putnam Dynamic Asset and Putnam Equity Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

Other Complementary Tools

Equity Valuation
Check real value of public entities based on technical and fundamental data
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Bonds Directory
Find actively traded corporate debentures issued by US companies