Correlation Between Putnam Multicap and Putnam Short
Can any of the company-specific risk be diversified away by investing in both Putnam Multicap and Putnam Short 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 Multicap and Putnam Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Multicap Core and Putnam Short Duration, you can compare the effects of market volatilities on Putnam Multicap and Putnam Short 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 Multicap with a short position of Putnam Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Multicap and Putnam Short.
Diversification Opportunities for Putnam Multicap and Putnam Short
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Multicap Core and Putnam Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Short Duration and Putnam Multicap 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 Multicap Core are associated (or correlated) with Putnam Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Short Duration has no effect on the direction of Putnam Multicap i.e., Putnam Multicap and Putnam Short go up and down completely randomly.
Pair Corralation between Putnam Multicap and Putnam Short
Assuming the 90 days horizon Putnam Multicap Core is expected to generate 10.2 times more return on investment than Putnam Short. However, Putnam Multicap is 10.2 times more volatile than Putnam Short Duration. It trades about 0.15 of its potential returns per unit of risk. Putnam Short Duration is currently generating about 0.2 per unit of risk. If you would invest 4,454 in Putnam Multicap Core on August 28, 2024 and sell it today you would earn a total of 127.00 from holding Putnam Multicap Core or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Putnam Multicap Core vs. Putnam Short Duration
Performance |
| Timeline |
| Putnam Multicap Core |
| Putnam Short Duration |
Putnam Multicap and Putnam Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Multicap and Putnam Short
The main advantage of trading using opposite Putnam Multicap and Putnam Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Multicap position performs unexpectedly, Putnam Short 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 Short will offset losses from the drop in Putnam Short's long position.| Putnam Multicap vs. Putnam Growth Opportunities | Putnam Multicap vs. Putnam International Equity | Putnam Multicap vs. George Putnam Fund | Putnam Multicap vs. Putnam Small Cap |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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