Correlation Between Heritage Fund and Putnam Money

Can any of the company-specific risk be diversified away by investing in both Heritage Fund and Putnam Money 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 Heritage Fund and Putnam Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heritage Fund I and Putnam Money Market, you can compare the effects of market volatilities on Heritage Fund and Putnam Money 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 Heritage Fund with a short position of Putnam Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Fund and Putnam Money.

Diversification Opportunities for Heritage Fund and Putnam Money

0.0

Correlation Coefficient

Heritage Fund  Putnam Money

Pay attention - limited upside

The 3 months correlation between Heritage and Putnam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Fund I and Putnam Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Money Market and Heritage 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 Heritage Fund I are associated (or correlated) with Putnam Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Money Market has no effect on the direction of Heritage Fund i.e., Heritage Fund and Putnam Money go up and down completely randomly.

Pair Corralation between Heritage Fund and Putnam Money

If you would invest  100.00  in Putnam Money Market on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Putnam Money Market or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Heritage Fund I  vs.  Putnam Money Market

Heritage Fund I

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heritage Fund I has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Putnam Money Market

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Money Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnam Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Heritage Fund and Putnam Money

The main advantage of trading using opposite Heritage Fund and Putnam Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Fund position performs unexpectedly, Putnam Money 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 Money will offset losses from the drop in Putnam Money's long position.

The idea behind Heritage Fund I and Putnam Money Market pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.