Correlation Between Davis Financial and Putnam Growth
Can any of the company-specific risk be diversified away by investing in both Davis Financial and Putnam Growth 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 Davis Financial and Putnam Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and Putnam Growth Opportunities, you can compare the effects of market volatilities on Davis Financial and Putnam Growth 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 Davis Financial with a short position of Putnam Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Putnam Growth.
Diversification Opportunities for Davis Financial and Putnam Growth
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Davis and Putnam is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Putnam Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Growth Opport and Davis Financial 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 Davis Financial Fund are associated (or correlated) with Putnam Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Growth Opport has no effect on the direction of Davis Financial i.e., Davis Financial and Putnam Growth go up and down completely randomly.
Pair Corralation between Davis Financial and Putnam Growth
Assuming the 90 days horizon Davis Financial Fund is expected to generate 1.05 times more return on investment than Putnam Growth. However, Davis Financial is 1.05 times more volatile than Putnam Growth Opportunities. It trades about 0.2 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about 0.12 per unit of risk. If you would invest 5,987 in Davis Financial Fund on September 12, 2024 and sell it today you would earn a total of 894.00 from holding Davis Financial Fund or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Davis Financial Fund vs. Putnam Growth Opportunities
Performance |
| Timeline |
| Davis Financial |
| Putnam Growth Opport |
Davis Financial and Putnam Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Putnam Growth
The main advantage of trading using opposite Davis Financial and Putnam Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial position performs unexpectedly, Putnam Growth 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 Growth will offset losses from the drop in Putnam Growth's long position.| Davis Financial vs. Aam Select Income | Davis Financial vs. Western Asset Municipal | Davis Financial vs. Ab Value Fund | Davis Financial vs. Qs Large Cap |
| Putnam Growth vs. Prudential Government Income | Putnam Growth vs. Payden Government Fund | Putnam Growth vs. Inverse Government Long | Putnam Growth vs. Long Term Government Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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