Correlation Between Smallcap Growth and Putnam Multi
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Putnam Multi 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 Smallcap Growth and Putnam Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Putnam Multi Cap Value, you can compare the effects of market volatilities on Smallcap Growth and Putnam Multi 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 Smallcap Growth with a short position of Putnam Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Putnam Multi.
Diversification Opportunities for Smallcap Growth and Putnam Multi
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smallcap and Putnam is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Putnam Multi Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multi Cap and Smallcap 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 Smallcap Growth Fund are associated (or correlated) with Putnam Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multi Cap has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Putnam Multi go up and down completely randomly.
Pair Corralation between Smallcap Growth and Putnam Multi
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.0 times more return on investment than Putnam Multi. However, Smallcap Growth Fund is 1.0 times less risky than Putnam Multi. It trades about 0.08 of its potential returns per unit of risk. Putnam Multi Cap Value is currently generating about 0.04 per unit of risk. If you would invest 1,380 in Smallcap Growth Fund on September 12, 2024 and sell it today you would earn a total of 316.00 from holding Smallcap Growth Fund or generate 22.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Putnam Multi Cap Value
Performance |
| Timeline |
| Smallcap Growth |
| Putnam Multi Cap |
Smallcap Growth and Putnam Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Putnam Multi
The main advantage of trading using opposite Smallcap Growth and Putnam Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Putnam Multi 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 Multi will offset losses from the drop in Putnam Multi's long position.| Smallcap Growth vs. Allianzgi Diversified Income | Smallcap Growth vs. Global Diversified Income | Smallcap Growth vs. Aqr Diversified Arbitrage | Smallcap Growth vs. Guggenheim Diversified Income |
| Putnam Multi vs. T Rowe Price | Putnam Multi vs. T Rowe Price | Putnam Multi vs. SCOR PK | Putnam Multi vs. Morningstar Unconstrained Allocation |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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