Correlation Between Putnam Equity and Meridian Small
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and Meridian 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 Meridian 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 Meridian Small Cap, you can compare the effects of market volatilities on Putnam Equity and Meridian 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 Meridian Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Meridian Small.
Diversification Opportunities for Putnam Equity and Meridian Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Meridian is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and Meridian Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian 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 Meridian Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Small Cap has no effect on the direction of Putnam Equity i.e., Putnam Equity and Meridian Small go up and down completely randomly.
Pair Corralation between Putnam Equity and Meridian Small
Assuming the 90 days horizon Putnam Equity is expected to generate 1.12 times less return on investment than Meridian Small. But when comparing it to its historical volatility, Putnam Equity Income is 1.76 times less risky than Meridian Small. It trades about 0.14 of its potential returns per unit of risk. Meridian Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Meridian Small Cap on September 1, 2024 and sell it today you would earn a total of 169.00 from holding Meridian Small Cap or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Putnam Equity Income vs. Meridian Small Cap
Performance |
| Timeline |
| Putnam Equity Income |
| Meridian Small Cap |
Putnam Equity and Meridian Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and Meridian Small
The main advantage of trading using opposite Putnam Equity and Meridian Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, Meridian 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 Meridian Small will offset losses from the drop in Meridian 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 |
| Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Growth Fund | Meridian Small vs. Meridian Equity Income |
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.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |