Correlation Between Putnam Growth and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Putnam Growth and Dow Jones 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 Growth and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Growth Opportunities and Dow Jones Industrial, you can compare the effects of market volatilities on Putnam Growth and Dow Jones 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 Growth with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Growth and Dow Jones.
Diversification Opportunities for Putnam Growth and Dow Jones
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Dow is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Growth Opportunities and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Putnam Growth 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 Growth Opportunities are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Putnam Growth i.e., Putnam Growth and Dow Jones go up and down completely randomly.
Pair Corralation between Putnam Growth and Dow Jones
Assuming the 90 days horizon Putnam Growth Opportunities is expected to under-perform the Dow Jones. In addition to that, Putnam Growth is 1.66 times more volatile than Dow Jones Industrial. It trades about -0.16 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.16 per unit of volatility. If you would invest 4,488,213 in Dow Jones Industrial on December 1, 2024 and sell it today you would lose (104,122) from holding Dow Jones Industrial or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Growth Opportunities vs. Dow Jones Industrial
Performance |
| Timeline |
Putnam Growth and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Putnam Growth Opportunities
Pair trading matchups for Putnam Growth
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Putnam Growth and Dow Jones
The main advantage of trading using opposite Putnam Growth and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Growth position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Putnam Growth vs. Us Government Securities | Putnam Growth vs. Government Securities Fund | Putnam Growth vs. Federated Government Income | Putnam Growth vs. Us Government Securities |
| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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