Correlation Between Growth Opportunities and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities 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 Growth Opportunities and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Opportunities Fund and Putnam Equity Income, you can compare the effects of market volatilities on Growth Opportunities 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 Growth Opportunities with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Putnam Equity.
Diversification Opportunities for Growth Opportunities and Putnam Equity
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Putnam is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund 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 Growth Opportunities 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 Growth Opportunities Fund 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 Growth Opportunities i.e., Growth Opportunities and Putnam Equity go up and down completely randomly.
Pair Corralation between Growth Opportunities and Putnam Equity
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 1.44 times more return on investment than Putnam Equity. However, Growth Opportunities is 1.44 times more volatile than Putnam Equity Income. It trades about 0.12 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.11 per unit of risk. If you would invest 3,324 in Growth Opportunities Fund on September 3, 2024 and sell it today you would earn a total of 2,532 from holding Growth Opportunities Fund or generate 76.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Putnam Equity Income
Performance |
| Timeline |
| Growth Opportunities |
| Putnam Equity Income |
Growth Opportunities and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Putnam Equity
The main advantage of trading using opposite Growth Opportunities and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities 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.| Growth Opportunities vs. Victory Rs Partners | Growth Opportunities vs. Lord Abbett Small | Growth Opportunities vs. Hennessy Nerstone Mid | Growth Opportunities vs. Fpa Queens Road |
| Putnam Equity vs. Dodge Cox Stock | Putnam Equity vs. American Funds American | Putnam Equity vs. American Funds American | Putnam Equity vs. American Mutual 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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