Correlation Between Putnam Short and American Funds
Can any of the company-specific risk be diversified away by investing in both Putnam Short and American Funds 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 American Funds 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 American Funds 2040, you can compare the effects of market volatilities on Putnam Short and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Short and American Funds.
Diversification Opportunities for Putnam Short and American Funds
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Short Duration and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Putnam Short i.e., Putnam Short and American Funds go up and down completely randomly.
Pair Corralation between Putnam Short and American Funds
Assuming the 90 days horizon Putnam Short Duration is not expected to generate positive returns. However, Putnam Short Duration is 10.06 times less risky than American Funds. It waists most of its returns potential to compensate for thr risk taken. American Funds is generating about 0.21 per unit of risk. If you would invest 2,158 in American Funds 2040 on September 15, 2024 and sell it today you would earn a total of 44.00 from holding American Funds 2040 or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Putnam Short Duration vs. American Funds 2040
Performance |
| Timeline |
| Putnam Short Duration |
| American Funds 2040 |
Putnam Short and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Short and American Funds
The main advantage of trading using opposite Putnam Short and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Short position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Putnam Short vs. Putnam Equity Income | Putnam Short vs. Putnam Tax Exempt | Putnam Short vs. Putnam Floating Rate | Putnam Short vs. Putnam High Yield |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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