Correlation Between Putnam Diversified and Auer Growth

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Can any of the company-specific risk be diversified away by investing in both Putnam Diversified and Auer Growth 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 Auer Growth 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 Auer Growth Fund, you can compare the effects of market volatilities on Putnam Diversified and Auer Growth 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 Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Diversified and Auer Growth.

Diversification Opportunities for Putnam Diversified and Auer Growth

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Putnam and Auer is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Diversified Income and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund 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 Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Putnam Diversified i.e., Putnam Diversified and Auer Growth go up and down completely randomly.

Pair Corralation between Putnam Diversified and Auer Growth

Assuming the 90 days horizon Putnam Diversified Income is expected to generate 0.24 times more return on investment than Auer Growth. However, Putnam Diversified Income is 4.22 times less risky than Auer Growth. It trades about 0.28 of its potential returns per unit of risk. Auer Growth Fund is currently generating about -0.03 per unit of risk. If you would invest  541.00  in Putnam Diversified Income on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Putnam Diversified Income or generate 1.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Putnam Diversified Income  vs.  Auer Growth Fund

 Performance 
       Timeline  
Putnam Diversified Income 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Diversified Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Auer Growth Fund 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Auer Growth Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Auer Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Diversified and Auer Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Putnam Diversified and Auer Growth

The main advantage of trading using opposite Putnam Diversified and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Diversified position performs unexpectedly, Auer Growth 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 Auer Growth will offset losses from the drop in Auer Growth's long position.
The idea behind Putnam Diversified Income and Auer Growth Fund 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.
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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 Stocks Directory module to find actively traded stocks across global markets.

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