Correlation Between Government Securities and Putnam Multi-cap
Can any of the company-specific risk be diversified away by investing in both Government Securities and Putnam Multi-cap 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 Government Securities and Putnam Multi-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Putnam Multi Cap Growth, you can compare the effects of market volatilities on Government Securities and Putnam Multi-cap 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 Government Securities with a short position of Putnam Multi-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Putnam Multi-cap.
Diversification Opportunities for Government Securities and Putnam Multi-cap
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Government and Putnam is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Putnam Multi Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multi Cap and Government Securities 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 Government Securities Fund are associated (or correlated) with Putnam Multi-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multi Cap has no effect on the direction of Government Securities i.e., Government Securities and Putnam Multi-cap go up and down completely randomly.
Pair Corralation between Government Securities and Putnam Multi-cap
Assuming the 90 days horizon Government Securities is expected to generate 12.11 times less return on investment than Putnam Multi-cap. But when comparing it to its historical volatility, Government Securities Fund is 2.27 times less risky than Putnam Multi-cap. It trades about 0.07 of its potential returns per unit of risk. Putnam Multi Cap Growth is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 13,201 in Putnam Multi Cap Growth on September 5, 2024 and sell it today you would earn a total of 753.00 from holding Putnam Multi Cap Growth or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Government Securities Fund vs. Putnam Multi Cap Growth
Performance |
| Timeline |
| Government Securities |
| Putnam Multi Cap |
Government Securities and Putnam Multi-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Securities and Putnam Multi-cap
The main advantage of trading using opposite Government Securities and Putnam Multi-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities position performs unexpectedly, Putnam Multi-cap 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 Multi-cap will offset losses from the drop in Putnam Multi-cap's long position.| Government Securities vs. First Eagle Gold | Government Securities vs. Global Gold Fund | Government Securities vs. Sprott Gold Equity | Government Securities vs. James Balanced Golden |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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