Correlation Between Putnam Short and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Putnam Short 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 Short 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 Short Duration and Putnam Equity Income, you can compare the effects of market volatilities on Putnam Short 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 Short with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Short and Putnam Equity.
Diversification Opportunities for Putnam Short and Putnam Equity
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Short Duration 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 Short 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 Short Duration 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 Short i.e., Putnam Short and Putnam Equity go up and down completely randomly.
Pair Corralation between Putnam Short and Putnam Equity
Assuming the 90 days horizon Putnam Short is expected to generate 55.45 times less return on investment than Putnam Equity. But when comparing it to its historical volatility, Putnam Short Duration is 17.94 times less risky than Putnam Equity. It trades about 0.13 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,690 in Putnam Equity Income on September 3, 2024 and sell it today you would earn a total of 204.00 from holding Putnam Equity Income or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Short Duration vs. Putnam Equity Income
Performance |
| Timeline |
| Putnam Short Duration |
| Putnam Equity Income |
Putnam Short and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Short and Putnam Equity
The main advantage of trading using opposite Putnam Short and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Short 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 Short vs. Gmo Resources | Putnam Short vs. Calvert Global Energy | Putnam Short vs. Icon Natural Resources | Putnam Short vs. Fidelity Advisor Energy |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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