Correlation Between Putnam High and Putnam Multi
Can any of the company-specific risk be diversified away by investing in both Putnam High and Putnam Multi 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 Multi 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 Multi Cap Growth, you can compare the effects of market volatilities on Putnam High and Putnam Multi 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 Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam High and Putnam Multi.
Diversification Opportunities for Putnam High and Putnam Multi
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 Multi Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multi Cap 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 Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multi Cap has no effect on the direction of Putnam High i.e., Putnam High and Putnam Multi go up and down completely randomly.
Pair Corralation between Putnam High and Putnam Multi
Assuming the 90 days horizon Putnam High is expected to generate 2.82 times less return on investment than Putnam Multi. But when comparing it to its historical volatility, Putnam High Yield is 3.05 times less risky than Putnam Multi. It trades about 0.12 of its potential returns per unit of risk. Putnam Multi Cap Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,465 in Putnam Multi Cap Growth on August 31, 2024 and sell it today you would earn a total of 4,527 from holding Putnam Multi Cap Growth or generate 53.48% 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 Multi Cap Growth
Performance |
| Timeline |
| Putnam High Yield |
| Putnam Multi Cap |
Putnam High and Putnam Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam High and Putnam Multi
The main advantage of trading using opposite Putnam High and Putnam Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High position performs unexpectedly, Putnam Multi 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 Multi will offset losses from the drop in Putnam Multi's long position.| Putnam High vs. Federated Institutional High | Putnam High vs. Valic Company I | Putnam High vs. Prudential Short Duration | Putnam High vs. Blackrock High Yield |
| Putnam Multi vs. Shelton Funds | Putnam Multi vs. Vanguard Small Cap Growth | Putnam Multi vs. Issachar Fund Class | Putnam Multi vs. Commonwealth Global Fund |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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