Correlation Between Putnam High and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Putnam High and Balanced Fund 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 Balanced Fund 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 Balanced Fund Institutional, you can compare the effects of market volatilities on Putnam High and Balanced Fund 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 Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Balanced Fund.
Diversification Opportunities for Putnam High and Balanced Fund
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Balanced is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income and Balanced Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Instit 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 Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Instit has no effect on the direction of Putnam High i.e., Putnam High and Balanced Fund go up and down completely randomly.
Pair Corralation between Putnam High and Balanced Fund
Considering the 90-day investment horizon Putnam High Income is expected to generate 1.75 times more return on investment than Balanced Fund. However, Putnam High is 1.75 times more volatile than Balanced Fund Institutional. It trades about 0.08 of its potential returns per unit of risk. Balanced Fund Institutional is currently generating about 0.13 per unit of risk. If you would invest 579.00 in Putnam High Income on August 25, 2024 and sell it today you would earn a total of 94.00 from holding Putnam High Income or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam High Income vs. Balanced Fund Institutional
Performance |
| Timeline |
| Putnam High Income |
| Balanced Fund Instit |
Putnam High and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Balanced Fund
The main advantage of trading using opposite Putnam High and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Balanced Fund 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 Balanced Fund will offset losses from the drop in Balanced Fund'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 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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