Correlation Between Putnam Small and Putnam Multi-cap
Can any of the company-specific risk be diversified away by investing in both Putnam Small and Putnam Multi-cap 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 Small and Putnam Multi-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Small Cap and Putnam Multi Cap Growth, you can compare the effects of market volatilities on Putnam Small and Putnam Multi-cap 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 Small with a short position of Putnam Multi-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Small and Putnam Multi-cap.
Diversification Opportunities for Putnam Small and Putnam Multi-cap
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 Small Cap and Putnam Multi Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multi Cap and Putnam Small 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 Small Cap are associated (or correlated) with Putnam Multi-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multi Cap has no effect on the direction of Putnam Small i.e., Putnam Small and Putnam Multi-cap go up and down completely randomly.
Pair Corralation between Putnam Small and Putnam Multi-cap
Assuming the 90 days horizon Putnam Small Cap is expected to generate 2.22 times more return on investment than Putnam Multi-cap. However, Putnam Small is 2.22 times more volatile than Putnam Multi Cap Growth. It trades about 0.34 of its potential returns per unit of risk. Putnam Multi Cap Growth is currently generating about 0.41 per unit of risk. If you would invest 1,742 in Putnam Small Cap on September 4, 2024 and sell it today you would earn a total of 178.00 from holding Putnam Small Cap or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Putnam Small Cap vs. Putnam Multi Cap Growth
Performance |
| Timeline |
| Putnam Small Cap |
| Putnam Multi Cap |
Putnam Small and Putnam Multi-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Small and Putnam Multi-cap
The main advantage of trading using opposite Putnam Small and Putnam Multi-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Small position performs unexpectedly, Putnam Multi-cap 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 Multi-cap will offset losses from the drop in Putnam Multi-cap's long position.| Putnam Small vs. Putnam Multi Cap Growth | Putnam Small vs. Putnam Multi Cap Growth | Putnam Small vs. Putnam Sustainable Future | Putnam Small vs. Putnam Equity Income |
| Putnam Multi-cap vs. Putnam International Equity | Putnam Multi-cap vs. George Putnam Fund | Putnam Multi-cap vs. Putnam Dynamic Asset | Putnam Multi-cap vs. Putnam Dynamic Asset |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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