Correlation Between Putnam Retirement and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both Putnam Retirement and Multimanager Lifestyle 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 Retirement and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Retirement Advantage and Multimanager Lifestyle Moderate, you can compare the effects of market volatilities on Putnam Retirement and Multimanager Lifestyle 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 Retirement with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Retirement and Multimanager Lifestyle.
Diversification Opportunities for Putnam Retirement and Multimanager Lifestyle
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Multimanager is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Retirement Advantage and Multimanager Lifestyle Moderat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and Putnam Retirement 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 Retirement Advantage are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Putnam Retirement i.e., Putnam Retirement and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between Putnam Retirement and Multimanager Lifestyle
Assuming the 90 days horizon Putnam Retirement Advantage is expected to generate 2.37 times more return on investment than Multimanager Lifestyle. However, Putnam Retirement is 2.37 times more volatile than Multimanager Lifestyle Moderate. It trades about 0.08 of its potential returns per unit of risk. Multimanager Lifestyle Moderate is currently generating about 0.07 per unit of risk. If you would invest 849.00 in Putnam Retirement Advantage on October 11, 2024 and sell it today you would earn a total of 338.00 from holding Putnam Retirement Advantage or generate 39.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Retirement Advantage vs. Multimanager Lifestyle Moderat
Performance |
| Timeline |
| Putnam Retirement |
| Multimanager Lifestyle |
Putnam Retirement and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Retirement and Multimanager Lifestyle
The main advantage of trading using opposite Putnam Retirement and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Retirement position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.| Putnam Retirement vs. Barings High Yield | Putnam Retirement vs. Fidelity Focused High | Putnam Retirement vs. Needham Aggressive Growth | Putnam Retirement vs. Millerhoward High Income |
| Multimanager Lifestyle vs. Arrow Managed Futures | Multimanager Lifestyle vs. Semiconductor Ultrasector Profund | Multimanager Lifestyle vs. Small Pany Growth | Multimanager Lifestyle vs. Qs Large Cap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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