Correlation Between Putnam High and Putnam Growth
Can any of the company-specific risk be diversified away by investing in both Putnam High and Putnam Growth 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 High and Putnam Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam High Yield and Putnam Growth Opportunities, you can compare the effects of market volatilities on Putnam High and Putnam Growth 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 High with a short position of Putnam Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Putnam Growth.
Diversification Opportunities for Putnam High and Putnam Growth
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Putnam is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Yield and Putnam Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Growth Opport and Putnam High 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 High Yield are associated (or correlated) with Putnam Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Growth Opport has no effect on the direction of Putnam High i.e., Putnam High and Putnam Growth go up and down completely randomly.
Pair Corralation between Putnam High and Putnam Growth
Assuming the 90 days horizon Putnam High is expected to generate 2.73 times less return on investment than Putnam Growth. But when comparing it to its historical volatility, Putnam High Yield is 7.43 times less risky than Putnam Growth. It trades about 0.26 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,713 in Putnam Growth Opportunities on September 1, 2024 and sell it today you would earn a total of 983.00 from holding Putnam Growth Opportunities or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam High Yield vs. Putnam Growth Opportunities
Performance |
| Timeline |
| Putnam High Yield |
| Putnam Growth Opport |
Putnam High and Putnam Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Putnam Growth
The main advantage of trading using opposite Putnam High and Putnam Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Putnam Growth 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 Putnam Growth will offset losses from the drop in Putnam Growth's long position.| Putnam High vs. Rbb Fund | Putnam High vs. Volumetric Fund Volumetric | Putnam High vs. Commonwealth Global Fund | Putnam High vs. Nasdaq 100 Index Fund |
| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Tax Exempt | Putnam Growth vs. Putnam Floating Rate | Putnam Growth vs. Putnam High Yield |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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