Correlation Between Putnam Global and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Growth Allocation 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 Global and Growth Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Global Financials and Growth Allocation Fund, you can compare the effects of market volatilities on Putnam Global and Growth Allocation 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 Global with a short position of Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Growth Allocation.
Diversification Opportunities for Putnam Global and Growth Allocation
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Growth is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation and Putnam Global 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 Global Financials are associated (or correlated) with Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Putnam Global i.e., Putnam Global and Growth Allocation go up and down completely randomly.
Pair Corralation between Putnam Global and Growth Allocation
Assuming the 90 days horizon Putnam Global is expected to generate 1.21 times less return on investment than Growth Allocation. But when comparing it to its historical volatility, Putnam Global Financials is 1.12 times less risky than Growth Allocation. It trades about 0.08 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,156 in Growth Allocation Fund on November 3, 2024 and sell it today you would earn a total of 146.00 from holding Growth Allocation Fund or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 84.62% |
| Values | Daily Returns |
Putnam Global Financials vs. Growth Allocation Fund
Performance |
| Timeline |
| Putnam Global Financials |
| Growth Allocation |
Putnam Global and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Growth Allocation
The main advantage of trading using opposite Putnam Global and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Growth Allocation 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 Growth Allocation will offset losses from the drop in Growth Allocation's long position.| Putnam Global vs. First Eagle Gold | Putnam Global vs. Precious Metals And | Putnam Global vs. Oppenheimer Gold Special | Putnam Global vs. Deutsche Gold Precious |
| Growth Allocation vs. Stone Ridge Diversified | Growth Allocation vs. Guidepath Conservative Income | Growth Allocation vs. Allianzgi Diversified Income | Growth Allocation vs. Tax Free Conservative Income |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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