Correlation Between Putnam Equity and Value Line
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and Value Line 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 Value Line 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 Value Line Small, you can compare the effects of market volatilities on Putnam Equity and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Value Line.
Diversification Opportunities for Putnam Equity and Value Line
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and VALUE is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and Value Line Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Small 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Small has no effect on the direction of Putnam Equity i.e., Putnam Equity and Value Line go up and down completely randomly.
Pair Corralation between Putnam Equity and Value Line
Assuming the 90 days horizon Putnam Equity is expected to generate 1.29 times less return on investment than Value Line. But when comparing it to its historical volatility, Putnam Equity Income is 1.75 times less risky than Value Line. It trades about 0.14 of its potential returns per unit of risk. Value Line Small is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,574 in Value Line Small on September 1, 2024 and sell it today you would earn a total of 890.00 from holding Value Line Small or generate 15.97% 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. Value Line Small
Performance |
| Timeline |
| Putnam Equity Income |
| Value Line Small |
Putnam Equity and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and Value Line
The main advantage of trading using opposite Putnam Equity and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line'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 |
| Value Line vs. Value Line Premier | Value Line vs. Value Line Income | Value Line vs. Ssga International Stock | Value Line vs. Scout Small Cap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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