Correlation Between Putnam High and Brown Capital
Can any of the company-specific risk be diversified away by investing in both Putnam High and Brown Capital 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 High and Brown Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam High Income and The Brown Capital, you can compare the effects of market volatilities on Putnam High and Brown Capital 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 High with a short position of Brown Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Brown Capital.
Diversification Opportunities for Putnam High and Brown Capital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Brown is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and The Brown Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Capital and Putnam High 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 High Income are associated (or correlated) with Brown Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Capital has no effect on the direction of Putnam High i.e., Putnam High and Brown Capital go up and down completely randomly.
Pair Corralation between Putnam High and Brown Capital
Considering the 90-day investment horizon Putnam High is expected to generate 4.63 times less return on investment than Brown Capital. But when comparing it to its historical volatility, Putnam High Income is 3.23 times less risky than Brown Capital. It trades about 0.25 of its potential returns per unit of risk. The Brown Capital is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 7,391 in The Brown Capital on September 1, 2024 and sell it today you would earn a total of 950.00 from holding The Brown Capital or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Putnam High Income vs. The Brown Capital
Performance |
| Timeline |
| Putnam High Income |
| Brown Capital |
Putnam High and Brown Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Brown Capital
The main advantage of trading using opposite Putnam High and Brown Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Brown Capital 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 Brown Capital will offset losses from the drop in Brown Capital's long position.| Putnam High vs. RiverNorthDoubleLine Strategic Opportunity | Putnam High vs. Cornerstone Strategic Return | Putnam High vs. Oxford Lane Capital | Putnam High vs. Horizon Technology Finance |
| Brown Capital vs. Pimco Moditiesplus Strategy | Brown Capital vs. International Fund International | Brown Capital vs. Cohen Steers Real | Brown Capital vs. New World Fund |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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