Correlation Between George Putnam and Putnam Multi-cap
Can any of the company-specific risk be diversified away by investing in both George Putnam and Putnam Multi-cap 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 Multi-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between George Putnam Fund and Putnam Multi Cap Growth, you can compare the effects of market volatilities on George Putnam and Putnam Multi-cap 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 Multi-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Putnam and Putnam Multi-cap.
Diversification Opportunities for George Putnam and Putnam Multi-cap
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between George and Putnam is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding George Putnam Fund 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 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 Fund are associated (or correlated) with Putnam Multi-cap. 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 George Putnam i.e., George Putnam and Putnam Multi-cap go up and down completely randomly.
Pair Corralation between George Putnam and Putnam Multi-cap
Assuming the 90 days horizon George Putnam Fund is expected to under-perform the Putnam Multi-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, George Putnam Fund is 1.04 times less risky than Putnam Multi-cap. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Putnam Multi Cap Growth is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,314 in Putnam Multi Cap Growth on September 3, 2024 and sell it today you would earn a total of 593.00 from holding Putnam Multi Cap Growth or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
George Putnam Fund vs. Putnam Multi Cap Growth
Performance |
| Timeline |
| George Putnam |
| Putnam Multi Cap |
George Putnam and Putnam Multi-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with George Putnam and Putnam Multi-cap
The main advantage of trading using opposite George Putnam and Putnam Multi-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if George Putnam position performs unexpectedly, Putnam Multi-cap 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-cap will offset losses from the drop in Putnam Multi-cap's long position.| George Putnam vs. Putnam International Equity | George Putnam vs. Putnam Equity Income | George Putnam vs. Putnam Income Fund | George Putnam vs. Putnam Global Equity |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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