Correlation Between Putnam Focused and Vanguard Growth
Can any of the company-specific risk be diversified away by investing in both Putnam Focused and Vanguard Growth 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 Vanguard Growth 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 Vanguard Growth Index, you can compare the effects of market volatilities on Putnam Focused and Vanguard Growth 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 Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Focused and Vanguard Growth.
Diversification Opportunities for Putnam Focused and Vanguard Growth
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Putnam and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index 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 Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Putnam Focused i.e., Putnam Focused and Vanguard Growth go up and down completely randomly.
Pair Corralation between Putnam Focused and Vanguard Growth
Given the investment horizon of 90 days Putnam Focused is expected to generate 1.01 times less return on investment than Vanguard Growth. But when comparing it to its historical volatility, Putnam Focused Large is 1.0 times less risky than Vanguard Growth. It trades about 0.11 of its potential returns per unit of risk. Vanguard Growth Index is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 22,712 in Vanguard Growth Index on September 3, 2024 and sell it today you would earn a total of 18,575 from holding Vanguard Growth Index or generate 81.78% 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. Vanguard Growth Index
Performance |
| Timeline |
| Putnam Focused Large |
| Vanguard Growth Index |
Putnam Focused and Vanguard Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Focused and Vanguard Growth
The main advantage of trading using opposite Putnam Focused and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Focused position performs unexpectedly, Vanguard Growth 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 Vanguard Growth will offset losses from the drop in Vanguard Growth'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 |
| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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