Correlation Between Putnam Equity and Gmo Small
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and Gmo Small 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 Equity and Gmo Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Equity Income and Gmo Small Cap, you can compare the effects of market volatilities on Putnam Equity and Gmo Small 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 Equity with a short position of Gmo Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Gmo Small.
Diversification Opportunities for Putnam Equity and Gmo Small
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Gmo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and Gmo Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Small Cap and Putnam Equity 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 Equity Income are associated (or correlated) with Gmo Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Small Cap has no effect on the direction of Putnam Equity i.e., Putnam Equity and Gmo Small go up and down completely randomly.
Pair Corralation between Putnam Equity and Gmo Small
Assuming the 90 days horizon Putnam Equity Income is expected to generate 0.64 times more return on investment than Gmo Small. However, Putnam Equity Income is 1.56 times less risky than Gmo Small. It trades about 0.07 of its potential returns per unit of risk. Gmo Small Cap is currently generating about 0.02 per unit of risk. If you would invest 2,812 in Putnam Equity Income on November 27, 2024 and sell it today you would earn a total of 766.00 from holding Putnam Equity Income or generate 27.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Equity Income vs. Gmo Small Cap
Performance |
| Timeline |
| Putnam Equity Income |
| Gmo Small Cap |
Putnam Equity and Gmo Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and Gmo Small
The main advantage of trading using opposite Putnam Equity and Gmo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, Gmo Small 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 Gmo Small will offset losses from the drop in Gmo Small's long position.| Putnam Equity vs. Putnam Growth Opportunities | Putnam Equity vs. Putnam International Equity | Putnam Equity vs. George Putnam Fund | Putnam Equity vs. Putnam Multi Cap Growth |
| Gmo Small vs. Valic Company I | Gmo Small vs. Inverse Mid Cap Strategy | Gmo Small vs. Blackrock Smid Cap Growth | Gmo Small vs. T Rowe Price |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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