Correlation Between George Putnam and Putnam Small
Can any of the company-specific risk be diversified away by investing in both George Putnam and Putnam Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on George Putnam and Putnam Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Putnam and Putnam Small.
Diversification Opportunities for George Putnam and Putnam Small
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 Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Small 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Small Cap has no effect on the direction of George Putnam i.e., George Putnam and Putnam Small go up and down completely randomly.
Pair Corralation between George Putnam and Putnam Small
Assuming the 90 days horizon George Putnam is expected to generate 1.68 times less return on investment than Putnam Small. But when comparing it to its historical volatility, George Putnam Fund is 2.01 times less risky than Putnam Small. It trades about 0.11 of its potential returns per unit of risk. Putnam Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,970 in Putnam Small Cap on August 31, 2024 and sell it today you would earn a total of 2,469 from holding Putnam Small Cap or generate 62.19% 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 Small Cap
Performance |
| Timeline |
| George Putnam |
| Putnam Small Cap |
George Putnam and Putnam Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with George Putnam and Putnam Small
The main advantage of trading using opposite George Putnam and Putnam Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if George Putnam position performs unexpectedly, Putnam Small 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 Small will offset losses from the drop in Putnam Small's long position.| George Putnam vs. American Funds American | George Putnam vs. American Funds American | George Putnam vs. American Balanced | George Putnam vs. American Balanced Fund |
| Putnam Small vs. The Hartford Midcap | Putnam Small vs. Mfs Emerging Markets | Putnam Small vs. Wells Fargo Special | Putnam Small vs. Baron Emerging Markets |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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