Correlation Between Putnam Small and The Hartford
Can any of the company-specific risk be diversified away by investing in both Putnam Small and The Hartford 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 The Hartford 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 The Hartford Midcap, you can compare the effects of market volatilities on Putnam Small and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Small and The Hartford.
Diversification Opportunities for Putnam Small and The Hartford
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and The is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Small Cap and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Midcap has no effect on the direction of Putnam Small i.e., Putnam Small and The Hartford go up and down completely randomly.
Pair Corralation between Putnam Small and The Hartford
Assuming the 90 days horizon Putnam Small Cap is expected to generate 1.07 times more return on investment than The Hartford. However, Putnam Small is 1.07 times more volatile than The Hartford Midcap. It trades about 0.09 of its potential returns per unit of risk. The Hartford Midcap is currently generating about 0.04 per unit of risk. If you would invest 4,102 in Putnam Small Cap on September 3, 2024 and sell it today you would earn a total of 2,373 from holding Putnam Small Cap or generate 57.85% 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. The Hartford Midcap
Performance |
| Timeline |
| Putnam Small Cap |
| Hartford Midcap |
Putnam Small and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Small and The Hartford
The main advantage of trading using opposite Putnam Small and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Small position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Putnam Small vs. Blackrock Financial Institutions | Putnam Small vs. John Hancock Financial | Putnam Small vs. Royce Global Financial | Putnam Small vs. Financials Ultrasector Profund |
| The Hartford vs. Europacific Growth Fund | The Hartford vs. Washington Mutual Investors | The Hartford vs. Wells Fargo Special | The Hartford vs. Mfs Emerging Markets |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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