Correlation Between Putnam Equity and Putnam Multicap
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and Putnam Multicap 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 Putnam Equity and Putnam Multicap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Equity Income and Putnam Multicap Core, you can compare the effects of market volatilities on Putnam Equity and Putnam Multicap 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 Putnam Equity with a short position of Putnam Multicap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Putnam Multicap.
Diversification Opportunities for Putnam Equity and Putnam Multicap
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Putnam is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and Putnam Multicap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multicap Core and Putnam Equity 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 Putnam Equity Income are associated (or correlated) with Putnam Multicap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multicap Core has no effect on the direction of Putnam Equity i.e., Putnam Equity and Putnam Multicap go up and down completely randomly.
Pair Corralation between Putnam Equity and Putnam Multicap
Assuming the 90 days horizon Putnam Equity is expected to generate 1.09 times less return on investment than Putnam Multicap. But when comparing it to its historical volatility, Putnam Equity Income is 1.15 times less risky than Putnam Multicap. It trades about 0.06 of its potential returns per unit of risk. Putnam Multicap Core is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,848 in Putnam Multicap Core on February 4, 2024 and sell it today you would earn a total of 917.00 from holding Putnam Multicap Core or generate 32.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Putnam Equity Income vs. Putnam Multicap Core
Performance |
Timeline |
Putnam Equity Income |
Putnam Multicap Core |
Putnam Equity and Putnam Multicap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Equity and Putnam Multicap
The main advantage of trading using opposite Putnam Equity and Putnam Multicap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, Putnam Multicap 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 Multicap will offset losses from the drop in Putnam Multicap's long position.Putnam Equity vs. Dodge Cox Stock | Putnam Equity vs. American Funds American | Putnam Equity vs. American Funds American | Putnam Equity vs. American Mutual Fund |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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