Correlation Between Putnam Multi-cap and Putnam Floating
Can any of the company-specific risk be diversified away by investing in both Putnam Multi-cap and Putnam Floating 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 Floating 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 Floating Rate, you can compare the effects of market volatilities on Putnam Multi-cap and Putnam Floating 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 Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Multi-cap and Putnam Floating.
Diversification Opportunities for Putnam Multi-cap and Putnam Floating
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Multi Cap Growth and Putnam Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Floating Rate 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 Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Floating Rate has no effect on the direction of Putnam Multi-cap i.e., Putnam Multi-cap and Putnam Floating go up and down completely randomly.
Pair Corralation between Putnam Multi-cap and Putnam Floating
Assuming the 90 days horizon Putnam Multi Cap Growth is expected to generate 4.56 times more return on investment than Putnam Floating. However, Putnam Multi-cap is 4.56 times more volatile than Putnam Floating Rate. It trades about 0.1 of its potential returns per unit of risk. Putnam Floating Rate is currently generating about 0.21 per unit of risk. If you would invest 10,361 in Putnam Multi Cap Growth on September 3, 2024 and sell it today you would earn a total of 5,281 from holding Putnam Multi Cap Growth or generate 50.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Multi Cap Growth vs. Putnam Floating Rate
Performance |
| Timeline |
| Putnam Multi Cap |
| Putnam Floating Rate |
Putnam Multi-cap and Putnam Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Multi-cap and Putnam Floating
The main advantage of trading using opposite Putnam Multi-cap and Putnam Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Multi-cap position performs unexpectedly, Putnam Floating 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 Floating will offset losses from the drop in Putnam Floating's long position.| Putnam Multi-cap vs. Putnam International Equity | Putnam Multi-cap vs. George Putnam Fund | Putnam Multi-cap vs. Putnam Dynamic Asset | Putnam Multi-cap vs. Putnam Dynamic Asset |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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