Correlation Between Putnam Multi-cap and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Putnam Multi-cap and Putnam Equity 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 Multi-cap and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Multi Cap Growth and Putnam Equity Income, you can compare the effects of market volatilities on Putnam Multi-cap and Putnam Equity 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 Multi-cap with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Multi-cap and Putnam Equity.
Diversification Opportunities for Putnam Multi-cap and Putnam Equity
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Putnam is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Multi Cap Growth and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Putnam Multi-cap 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 Multi Cap Growth are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Putnam Multi-cap i.e., Putnam Multi-cap and Putnam Equity go up and down completely randomly.
Pair Corralation between Putnam Multi-cap and Putnam Equity
Assuming the 90 days horizon Putnam Multi Cap Growth is expected to generate 1.25 times more return on investment than Putnam Equity. However, Putnam Multi-cap is 1.25 times more volatile than Putnam Equity Income. It trades about 0.12 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.15 per unit of risk. If you would invest 10,578 in Putnam Multi Cap Growth on August 24, 2024 and sell it today you would earn a total of 2,964 from holding Putnam Multi Cap Growth or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Putnam Multi Cap Growth vs. Putnam Equity Income
Performance |
| Timeline |
| Putnam Multi Cap |
| Putnam Equity Income |
Putnam Multi-cap and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Multi-cap and Putnam Equity
The main advantage of trading using opposite Putnam Multi-cap and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Multi-cap position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.| Putnam Multi-cap vs. HUMANA INC | Putnam Multi-cap vs. Aquagold International | Putnam Multi-cap vs. Barloworld Ltd ADR | Putnam Multi-cap vs. Morningstar Unconstrained Allocation |
| Putnam Equity vs. Putnam Growth Opportunities | Putnam Equity vs. Putnam International Equity | Putnam Equity vs. George Putnam Fund | Putnam Equity vs. Putnam Multi Cap Growth |
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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