Correlation Between Putnam Equity and Wasatch Micro
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and Wasatch Micro 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 Wasatch Micro 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 Wasatch Micro Cap, you can compare the effects of market volatilities on Putnam Equity and Wasatch Micro 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 Wasatch Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Wasatch Micro.
Diversification Opportunities for Putnam Equity and Wasatch Micro
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Wasatch is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and Wasatch Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Micro 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 Wasatch Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Micro Cap has no effect on the direction of Putnam Equity i.e., Putnam Equity and Wasatch Micro go up and down completely randomly.
Pair Corralation between Putnam Equity and Wasatch Micro
Assuming the 90 days horizon Putnam Equity is expected to generate 1.95 times less return on investment than Wasatch Micro. But when comparing it to its historical volatility, Putnam Equity Income is 1.96 times less risky than Wasatch Micro. It trades about 0.14 of its potential returns per unit of risk. Wasatch Micro Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 356.00 in Wasatch Micro Cap on September 1, 2024 and sell it today you would earn a total of 90.00 from holding Wasatch Micro Cap or generate 25.28% 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. Wasatch Micro Cap
Performance |
| Timeline |
| Putnam Equity Income |
| Wasatch Micro Cap |
Putnam Equity and Wasatch Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and Wasatch Micro
The main advantage of trading using opposite Putnam Equity and Wasatch Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, Wasatch Micro 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 Wasatch Micro will offset losses from the drop in Wasatch Micro'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 |
| Wasatch Micro vs. Wasatch Micro Cap | Wasatch Micro vs. Wasatch International Opportunities | Wasatch Micro vs. Wasatch Small Cap | Wasatch Micro vs. Wasatch Emerging Markets |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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