Correlation Between Columbia Select and Putnam Money

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

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

Diversification Opportunities for Columbia Select and Putnam Money

0.0

Correlation Coefficient

Columbia Select  Putnam Money

Pay attention - limited upside

The 3 months correlation between Columbia and Putnam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Select Large 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 Columbia Select 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 Columbia Select Large 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 Columbia Select i.e., Columbia Select and Putnam Money go up and down completely randomly.

Pair Corralation between Columbia Select and Putnam Money

Assuming the 90 days horizon Columbia Select Large is expected to generate 9.51 times more return on investment than Putnam Money. However, Columbia Select is 9.51 times more volatile than Putnam Money Market. It trades about 0.05 of its potential returns per unit of risk. Putnam Money Market is currently generating about 0.13 per unit of risk. If you would invest  966.00  in Columbia Select Large on September 25, 2024 and sell it today you would earn a total of  115.00  from holding Columbia Select Large or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	92.34%
Values	Daily Returns

Columbia Select Large  vs.  Putnam Money Market

Columbia Select Large

Risk-Adjusted Performance

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Good

Over the last 90 days Columbia Select Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Columbia Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Putnam Money Market

Risk-Adjusted Performance

0 of 100

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 Columbia Select and Putnam Money

The main advantage of trading using opposite Columbia Select and Putnam Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Select 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 Columbia Select Large 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .