Correlation Between Siit Small and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Siit Small and Putnam Equity 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 Siit Small and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siit Small Mid and Putnam Equity Income, you can compare the effects of market volatilities on Siit Small and Putnam Equity 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 Siit Small with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siit Small and Putnam Equity.
Diversification Opportunities for Siit Small and Putnam Equity
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Siit and Putnam is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Siit Small Mid and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Siit 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 Siit Small Mid are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Siit Small i.e., Siit Small and Putnam Equity go up and down completely randomly.
Pair Corralation between Siit Small and Putnam Equity
Assuming the 90 days horizon Siit Small Mid is expected to generate 0.6 times more return on investment than Putnam Equity. However, Siit Small Mid is 1.66 times less risky than Putnam Equity. It trades about -0.02 of its potential returns per unit of risk. Putnam Equity Income is currently generating about -0.23 per unit of risk. If you would invest 1,158 in Siit Small Mid on September 13, 2024 and sell it today you would lose (4.00) from holding Siit Small Mid or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Siit Small Mid vs. Putnam Equity Income
Performance |
| Timeline |
| Siit Small Mid |
| Putnam Equity Income |
Siit Small and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siit Small and Putnam Equity
The main advantage of trading using opposite Siit Small and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siit Small position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.| Siit Small vs. Financials Ultrasector Profund | Siit Small vs. John Hancock Financial | Siit Small vs. Mesirow Financial Small | Siit Small vs. Davis Financial Fund |
| Putnam Equity vs. Putnam Equity Income | Putnam Equity vs. Putnam Tax Exempt | Putnam Equity vs. Putnam Floating Rate | Putnam Equity 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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