Correlation Between Putnam Growth and Dreyfus Government
Can any of the company-specific risk be diversified away by investing in both Putnam Growth and Dreyfus Government 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 Dreyfus Government 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 Dreyfus Government Cash, you can compare the effects of market volatilities on Putnam Growth and Dreyfus Government 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 Dreyfus Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Growth and Dreyfus Government.
Diversification Opportunities for Putnam Growth and Dreyfus Government
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Dreyfus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Growth Opportunities and Dreyfus Government Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Government Cash 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 Dreyfus Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Government Cash has no effect on the direction of Putnam Growth i.e., Putnam Growth and Dreyfus Government go up and down completely randomly.
Pair Corralation between Putnam Growth and Dreyfus Government
Assuming the 90 days horizon Putnam Growth Opportunities is expected to generate 4.28 times more return on investment than Dreyfus Government. However, Putnam Growth is 4.28 times more volatile than Dreyfus Government Cash. It trades about 0.09 of its potential returns per unit of risk. Dreyfus Government Cash is currently generating about 0.06 per unit of risk. If you would invest 6,833 in Putnam Growth Opportunities on September 2, 2024 and sell it today you would earn a total of 964.00 from holding Putnam Growth Opportunities or generate 14.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Putnam Growth Opportunities vs. Dreyfus Government Cash
Performance |
| Timeline |
| Putnam Growth Opport |
| Dreyfus Government Cash |
Putnam Growth and Dreyfus Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Growth and Dreyfus Government
The main advantage of trading using opposite Putnam Growth and Dreyfus Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Growth position performs unexpectedly, Dreyfus Government 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 Dreyfus Government will offset losses from the drop in Dreyfus Government's long position.| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Tax Exempt | Putnam Growth vs. Putnam Floating Rate | Putnam Growth vs. Putnam High Yield |
| Dreyfus Government vs. Balanced Fund Investor | Dreyfus Government vs. Aam Select Income | Dreyfus Government vs. Fabxx | Dreyfus Government vs. Falcon Focus Scv |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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