Correlation Between Short-term Fund and Putnam Short
Can any of the company-specific risk be diversified away by investing in both Short-term Fund and Putnam Short 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 Short-term Fund and Putnam Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Term Fund R and Putnam Short Duration, you can compare the effects of market volatilities on Short-term Fund and Putnam Short 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 Short-term Fund with a short position of Putnam Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Fund and Putnam Short.
Diversification Opportunities for Short-term Fund and Putnam Short
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Short-term and Putnam is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Fund R and Putnam Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Short Duration and Short-term Fund 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 Short Term Fund R are associated (or correlated) with Putnam Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Short Duration has no effect on the direction of Short-term Fund i.e., Short-term Fund and Putnam Short go up and down completely randomly.
Pair Corralation between Short-term Fund and Putnam Short
Assuming the 90 days horizon Short-term Fund is expected to generate 1.03 times less return on investment than Putnam Short. But when comparing it to its historical volatility, Short Term Fund R is 1.01 times less risky than Putnam Short. It trades about 0.22 of its potential returns per unit of risk. Putnam Short Duration is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 983.00 in Putnam Short Duration on August 28, 2024 and sell it today you would earn a total of 27.00 from holding Putnam Short Duration or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Term Fund R vs. Putnam Short Duration
Performance |
| Timeline |
| Short Term Fund |
| Putnam Short Duration |
Short-term Fund and Putnam Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-term Fund and Putnam Short
The main advantage of trading using opposite Short-term Fund and Putnam Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Fund position performs unexpectedly, Putnam Short 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 Short will offset losses from the drop in Putnam Short's long position.| Short-term Fund vs. Highland Longshort Healthcare | Short-term Fund vs. Tekla Healthcare Opportunities | Short-term Fund vs. Delaware Healthcare Fund | Short-term Fund vs. Lord Abbett Health |
| Putnam Short vs. Putnam Equity Income | Putnam Short vs. Putnam Tax Exempt | Putnam Short vs. Putnam Floating Rate | Putnam Short vs. Putnam High Yield |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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