Correlation Between Putnam Small and Putnam Multi
Can any of the company-specific risk be diversified away by investing in both Putnam Small 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 Putnam Small and Putnam Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Small Cap and Putnam Multi Cap Value, you can compare the effects of market volatilities on Putnam Small 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 Putnam Small with a short position of Putnam Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Small and Putnam Multi.
Diversification Opportunities for Putnam Small and Putnam Multi
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Putnam is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Small Cap 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 Putnam Small 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 Small Cap 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 Putnam Small i.e., Putnam Small and Putnam Multi go up and down completely randomly.
Pair Corralation between Putnam Small and Putnam Multi
Assuming the 90 days horizon Putnam Small Cap is expected to generate 1.14 times more return on investment than Putnam Multi. However, Putnam Small is 1.14 times more volatile than Putnam Multi Cap Value. It trades about 0.09 of its potential returns per unit of risk. Putnam Multi Cap Value is currently generating about 0.09 per unit of risk. If you would invest 4,985 in Putnam Small Cap on September 2, 2024 and sell it today you would earn a total of 3,093 from holding Putnam Small Cap or generate 62.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Small Cap vs. Putnam Multi Cap Value
Performance |
| Timeline |
| Putnam Small Cap |
| Putnam Multi Cap |
Putnam Small and Putnam Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Small and Putnam Multi
The main advantage of trading using opposite Putnam Small and Putnam Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Small 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.| Putnam Small vs. Putnam Multi Cap Value | Putnam Small vs. Putnam International Capital | Putnam Small vs. Putnam Small Cap | Putnam Small vs. Putnam Equity Income |
| Putnam Multi vs. Putnam Equity Income | Putnam Multi vs. Putnam Tax Exempt | Putnam Multi vs. Putnam Floating Rate | Putnam Multi vs. Putnam High Yield |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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