Correlation Between Balanced Fund and Putnam Growth
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and Putnam Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Putnam Growth Opportunities, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of Putnam Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Putnam Growth.
Diversification Opportunities for Balanced Fund and Putnam Growth
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and Putnam is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor 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 Balanced Fund 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 Balanced Fund Investor 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 Balanced Fund i.e., Balanced Fund and Putnam Growth go up and down completely randomly.
Pair Corralation between Balanced Fund and Putnam Growth
Assuming the 90 days horizon Balanced Fund is expected to generate 3.29 times less return on investment than Putnam Growth. But when comparing it to its historical volatility, Balanced Fund Investor is 2.51 times less risky than Putnam Growth. It trades about 0.16 of its potential returns per unit of risk. Putnam Growth Opportunities is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6,404 in Putnam Growth Opportunities on September 13, 2024 and sell it today you would earn a total of 265.00 from holding Putnam Growth Opportunities or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Balanced Fund Investor vs. Putnam Growth Opportunities
Performance |
| Timeline |
| Balanced Fund Investor |
| Putnam Growth Opport |
Balanced Fund and Putnam Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Putnam Growth
The main advantage of trading using opposite Balanced Fund and Putnam Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Tax Exempt | Putnam Growth vs. Putnam Floating Rate | Putnam Growth 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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