Correlation Between George Putnam and Putnam Income
Can any of the company-specific risk be diversified away by investing in both George Putnam and Putnam Income 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 George Putnam and Putnam Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between George Putnam Balanced and Putnam Income Fund, you can compare the effects of market volatilities on George Putnam and Putnam Income 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 George Putnam with a short position of Putnam Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Putnam and Putnam Income.
Diversification Opportunities for George Putnam and Putnam Income
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between George and Putnam is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding George Putnam Balanced and Putnam Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Income and George Putnam 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 George Putnam Balanced are associated (or correlated) with Putnam Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Income has no effect on the direction of George Putnam i.e., George Putnam and Putnam Income go up and down completely randomly.
Pair Corralation between George Putnam and Putnam Income
Assuming the 90 days horizon George Putnam Balanced is expected to generate 1.43 times more return on investment than Putnam Income. However, George Putnam is 1.43 times more volatile than Putnam Income Fund. It trades about 0.11 of its potential returns per unit of risk. Putnam Income Fund is currently generating about 0.04 per unit of risk. If you would invest 1,944 in George Putnam Balanced on September 2, 2024 and sell it today you would earn a total of 689.00 from holding George Putnam Balanced or generate 35.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
George Putnam Balanced vs. Putnam Income Fund
Performance |
| Timeline |
| George Putnam Balanced |
| Putnam Income |
George Putnam and Putnam Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with George Putnam and Putnam Income
The main advantage of trading using opposite George Putnam and Putnam Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if George Putnam position performs unexpectedly, Putnam Income 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 Income will offset losses from the drop in Putnam Income's long position.| George Putnam vs. Putnam Equity Income | George Putnam vs. Putnam Tax Exempt | George Putnam vs. Putnam Floating Rate | George Putnam vs. Putnam High Yield |
| Putnam Income vs. Putnam Equity Income | Putnam Income vs. Putnam Tax Exempt | Putnam Income vs. Putnam Floating Rate | Putnam Income 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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