Correlation Between Putnam Short and American Beacon
Can any of the company-specific risk be diversified away by investing in both Putnam Short and American Beacon 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 Beacon 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 Beacon Twentyfour, you can compare the effects of market volatilities on Putnam Short and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Short and American Beacon.
Diversification Opportunities for Putnam Short and American Beacon
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and American is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Short Duration and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Twen has no effect on the direction of Putnam Short i.e., Putnam Short and American Beacon go up and down completely randomly.
Pair Corralation between Putnam Short and American Beacon
Assuming the 90 days horizon Putnam Short Duration is expected to generate 1.33 times more return on investment than American Beacon. However, Putnam Short is 1.33 times more volatile than American Beacon Twentyfour. It trades about 0.25 of its potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.08 per unit of risk. If you would invest 1,007 in Putnam Short Duration on October 22, 2024 and sell it today you would earn a total of 5.00 from holding Putnam Short Duration or generate 0.5% 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. American Beacon Twentyfour
Performance |
| Timeline |
| Putnam Short Duration |
| American Beacon Twen |
Putnam Short and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Short and American Beacon
The main advantage of trading using opposite Putnam Short and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Short position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Putnam Short vs. T Rowe Price | Putnam Short vs. Lord Abbett Diversified | Putnam Short vs. Aqr Diversified Arbitrage | Putnam Short vs. Tax Managed Mid Small |
| American Beacon vs. Hennessy Small Cap | American Beacon vs. Mesirow Financial Small | American Beacon vs. T Rowe Price | American Beacon vs. Rmb Mendon Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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