Correlation Between Allianzgi Mid-cap and Putnam Short
Can any of the company-specific risk be diversified away by investing in both Allianzgi Mid-cap 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 Allianzgi Mid-cap and Putnam Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianzgi Mid Cap Fund and Putnam Short Duration, you can compare the effects of market volatilities on Allianzgi Mid-cap 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 Allianzgi Mid-cap with a short position of Putnam Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Mid-cap and Putnam Short.
Diversification Opportunities for Allianzgi Mid-cap and Putnam Short
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allianzgi and Putnam is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Mid Cap Fund 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 Allianzgi Mid-cap 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 Allianzgi Mid Cap Fund 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 Allianzgi Mid-cap i.e., Allianzgi Mid-cap and Putnam Short go up and down completely randomly.
Pair Corralation between Allianzgi Mid-cap and Putnam Short
Assuming the 90 days horizon Allianzgi Mid Cap Fund is expected to generate 12.45 times more return on investment than Putnam Short. However, Allianzgi Mid-cap is 12.45 times more volatile than Putnam Short Duration. It trades about 0.29 of its potential returns per unit of risk. Putnam Short Duration is currently generating about 0.16 per unit of risk. If you would invest 404.00 in Allianzgi Mid Cap Fund on September 2, 2024 and sell it today you would earn a total of 79.00 from holding Allianzgi Mid Cap Fund or generate 19.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allianzgi Mid Cap Fund vs. Putnam Short Duration
Performance |
| Timeline |
| Allianzgi Mid Cap |
| Putnam Short Duration |
Allianzgi Mid-cap and Putnam Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianzgi Mid-cap and Putnam Short
The main advantage of trading using opposite Allianzgi Mid-cap and Putnam Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Mid-cap 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.The idea behind Allianzgi Mid Cap Fund and Putnam Short Duration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 CEOs Directory module to screen CEOs from public companies around the world.
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