Correlation Between American Funds and Putnam Short
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Putnam Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2040 and Putnam Short Duration, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Putnam Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Putnam Short.
Diversification Opportunities for American Funds and Putnam Short
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Putnam is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2040 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 American Funds 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 American Funds 2040 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 American Funds i.e., American Funds and Putnam Short go up and down completely randomly.
Pair Corralation between American Funds and Putnam Short
Assuming the 90 days horizon American Funds 2040 is expected to under-perform the Putnam Short. In addition to that, American Funds is 13.96 times more volatile than Putnam Short Duration. It trades about -0.08 of its total potential returns per unit of risk. Putnam Short Duration is currently generating about 0.13 per unit of volatility. If you would invest 1,012 in Putnam Short Duration on December 4, 2024 and sell it today you would earn a total of 1.00 from holding Putnam Short Duration or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Funds 2040 vs. Putnam Short Duration
Performance |
| Timeline |
| American Funds 2040 |
| Putnam Short Duration |
Risk-Adjusted Performance
Good
Weak | Strong |
American Funds and Putnam Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Putnam Short
The main advantage of trading using opposite American Funds and Putnam Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Blackrock All Cap Energy | American Funds vs. Transamerica Mlp Energy | American Funds vs. Oil Gas Ultrasector | American Funds vs. Vanguard Energy Index |
| Putnam Short vs. Hartford Schroders Emerging | Putnam Short vs. The Hartford Emerging | Putnam Short vs. Barings Emerging Markets | Putnam Short vs. Doubleline Emerging Markets |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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