Correlation Between Putnam Diversified and Europac Gold
Can any of the company-specific risk be diversified away by investing in both Putnam Diversified and Europac Gold 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 Diversified and Europac Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Diversified Income and Europac Gold Fund, you can compare the effects of market volatilities on Putnam Diversified and Europac Gold 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 Diversified with a short position of Europac Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Diversified and Europac Gold.
Diversification Opportunities for Putnam Diversified and Europac Gold
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Europac is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Diversified Income and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold and Putnam Diversified 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 Diversified Income are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Putnam Diversified i.e., Putnam Diversified and Europac Gold go up and down completely randomly.
Pair Corralation between Putnam Diversified and Europac Gold
Assuming the 90 days horizon Putnam Diversified is expected to generate 8.48 times less return on investment than Europac Gold. But when comparing it to its historical volatility, Putnam Diversified Income is 7.83 times less risky than Europac Gold. It trades about 0.04 of its potential returns per unit of risk. Europac Gold Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 996.00 in Europac Gold Fund on November 27, 2024 and sell it today you would earn a total of 74.00 from holding Europac Gold Fund or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Diversified Income vs. Europac Gold Fund
Performance |
| Timeline |
| Putnam Diversified Income |
| Europac Gold |
Putnam Diversified and Europac Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Diversified and Europac Gold
The main advantage of trading using opposite Putnam Diversified and Europac Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Diversified position performs unexpectedly, Europac Gold 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 Europac Gold will offset losses from the drop in Europac Gold's long position.| Putnam Diversified vs. Tax Managed Large Cap | Putnam Diversified vs. T Rowe Price | Putnam Diversified vs. T Rowe Price | Putnam Diversified vs. Principal Lifetime Hybrid |
| Europac Gold vs. Europac International Value | Europac Gold vs. Europac International Dividend | Europac Gold vs. Ep Emerging Markets | Europac Gold vs. Europac International Bond |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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