Correlation Between Putnam Growth and Needham Small
Can any of the company-specific risk be diversified away by investing in both Putnam Growth and Needham Small 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 Growth and Needham Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Growth Opportunities and Needham Small Cap, you can compare the effects of market volatilities on Putnam Growth and Needham Small 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 Growth with a short position of Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Growth and Needham Small.
Diversification Opportunities for Putnam Growth and Needham Small
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Needham is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Growth Opportunities and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Small Cap and Putnam Growth 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 Growth Opportunities are associated (or correlated) with Needham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of Putnam Growth i.e., Putnam Growth and Needham Small go up and down completely randomly.
Pair Corralation between Putnam Growth and Needham Small
Assuming the 90 days horizon Putnam Growth is expected to generate 1.36 times less return on investment than Needham Small. But when comparing it to its historical volatility, Putnam Growth Opportunities is 1.79 times less risky than Needham Small. It trades about 0.3 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,752 in Needham Small Cap on September 1, 2024 and sell it today you would earn a total of 144.00 from holding Needham Small Cap or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Growth Opportunities vs. Needham Small Cap
Performance |
| Timeline |
| Putnam Growth Opport |
| Needham Small Cap |
Putnam Growth and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Growth and Needham Small
The main advantage of trading using opposite Putnam Growth and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Growth position performs unexpectedly, Needham Small 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 Needham Small will offset losses from the drop in Needham Small's long position.| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Multi Cap Growth | Putnam Growth vs. Putnam Global Health | Putnam Growth vs. Putnam International Equity |
| Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap |
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.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |