Correlation Between Putnam Focused and American Century
Can any of the company-specific risk be diversified away by investing in both Putnam Focused and American Century 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 American Century 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 American Century Sustainable, you can compare the effects of market volatilities on Putnam Focused and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Focused and American Century.
Diversification Opportunities for Putnam Focused and American Century
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Putnam and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and American Century Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Sus 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Sus has no effect on the direction of Putnam Focused i.e., Putnam Focused and American Century go up and down completely randomly.
Pair Corralation between Putnam Focused and American Century
Given the investment horizon of 90 days Putnam Focused Large is expected to generate 1.05 times more return on investment than American Century. However, Putnam Focused is 1.05 times more volatile than American Century Sustainable. It trades about 0.12 of its potential returns per unit of risk. American Century Sustainable is currently generating about 0.08 per unit of risk. If you would invest 3,676 in Putnam Focused Large on August 26, 2024 and sell it today you would earn a total of 103.00 from holding Putnam Focused Large or generate 2.8% 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. American Century Sustainable
Performance |
| Timeline |
| Putnam Focused Large |
| American Century Sus |
Putnam Focused and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Focused and American Century
The main advantage of trading using opposite Putnam Focused and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Focused position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Putnam Focused vs. Invesco Dynamic Large | Putnam Focused vs. Perella Weinberg Partners | Putnam Focused vs. HUMANA INC | Putnam Focused vs. Aquagold International |
| American Century vs. American Century Sustainable | American Century vs. IndexIQ Active ETF | American Century vs. FlexShares STOXX Global | American Century vs. Putnam Focused Large |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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