Correlation Between Putnam Equity and George Putnam
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and George Putnam 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 George Putnam 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 George Putnam Fund, you can compare the effects of market volatilities on Putnam Equity and George Putnam 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 George Putnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and George Putnam.
Diversification Opportunities for Putnam Equity and George Putnam
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and George is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and George Putnam Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Putnam 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 George Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Putnam has no effect on the direction of Putnam Equity i.e., Putnam Equity and George Putnam go up and down completely randomly.
Pair Corralation between Putnam Equity and George Putnam
Assuming the 90 days horizon Putnam Equity is expected to generate 1.18 times less return on investment than George Putnam. In addition to that, Putnam Equity is 1.36 times more volatile than George Putnam Fund. It trades about 0.07 of its total potential returns per unit of risk. George Putnam Fund is currently generating about 0.12 per unit of volatility. If you would invest 1,952 in George Putnam Fund on August 26, 2024 and sell it today you would earn a total of 731.00 from holding George Putnam Fund or generate 37.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Equity Income vs. George Putnam Fund
Performance |
| Timeline |
| Putnam Equity Income |
| George Putnam |
Putnam Equity and George Putnam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and George Putnam
The main advantage of trading using opposite Putnam Equity and George Putnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, George Putnam 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 George Putnam will offset losses from the drop in George Putnam'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 |
| George Putnam vs. Putnam International Equity | George Putnam vs. Putnam Equity Income | George Putnam vs. Putnam Income Fund | George Putnam vs. Putnam Global Equity |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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