Correlation Between Putnam Focused and First Trust
Can any of the company-specific risk be diversified away by investing in both Putnam Focused and First Trust 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 Focused and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Focused Large and First Trust Exchange Traded, you can compare the effects of market volatilities on Putnam Focused and First Trust 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 Focused with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Focused and First Trust.
Diversification Opportunities for Putnam Focused and First Trust
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Putnam Focused 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 Focused Large are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of Putnam Focused i.e., Putnam Focused and First Trust go up and down completely randomly.
Pair Corralation between Putnam Focused and First Trust
Given the investment horizon of 90 days Putnam Focused Large is expected to generate 2.82 times more return on investment than First Trust. However, Putnam Focused is 2.82 times more volatile than First Trust Exchange Traded. It trades about 0.12 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.14 per unit of risk. If you would invest 2,089 in Putnam Focused Large on August 30, 2024 and sell it today you would earn a total of 1,693 from holding Putnam Focused Large or generate 81.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Focused Large vs. First Trust Exchange Traded
Performance |
| Timeline |
| Putnam Focused Large |
| First Trust Exchange |
Putnam Focused and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Focused and First Trust
The main advantage of trading using opposite Putnam Focused and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Focused position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Putnam Focused vs. Putnam Focused Large | Putnam Focused vs. Putnam Sustainable Future | Putnam Focused vs. Putnam Sustainable Leaders | Putnam Focused vs. Sterling Capital Focus |
| First Trust vs. ABIVAX Socit Anonyme | First Trust vs. Pinnacle Sherman Multi Strategy | First Trust vs. Morningstar Unconstrained Allocation | First Trust vs. SPACE |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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