Correlation Between Putnam Money and Rainier International
Can any of the company-specific risk be diversified away by investing in both Putnam Money and Rainier International 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 Money and Rainier International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Money Market and Rainier International Discovery, you can compare the effects of market volatilities on Putnam Money and Rainier International 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 Money with a short position of Rainier International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Money and Rainier International.
Diversification Opportunities for Putnam Money and Rainier International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Putnam and Rainier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Money Market and Rainier International Discover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainier International and Putnam Money 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 Money Market are associated (or correlated) with Rainier International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainier International has no effect on the direction of Putnam Money i.e., Putnam Money and Rainier International go up and down completely randomly.
Pair Corralation between Putnam Money and Rainier International
Assuming the 90 days horizon Putnam Money is expected to generate 1.23 times less return on investment than Rainier International. But when comparing it to its historical volatility, Putnam Money Market is 6.8 times less risky than Rainier International. It trades about 0.13 of its potential returns per unit of risk. Rainier International Discovery is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,361 in Rainier International Discovery on September 13, 2024 and sell it today you would earn a total of 48.00 from holding Rainier International Discovery or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Money Market vs. Rainier International Discover
Performance |
| Timeline |
| Putnam Money Market |
| Rainier International |
Putnam Money and Rainier International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Money and Rainier International
The main advantage of trading using opposite Putnam Money and Rainier International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Money position performs unexpectedly, Rainier International 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 Rainier International will offset losses from the drop in Rainier International's long position.| Putnam Money vs. Vanguard Total Stock | Putnam Money vs. Vanguard 500 Index | Putnam Money vs. Vanguard Total Stock | Putnam Money vs. Vanguard Total Stock |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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