Correlation Between Balanced Fund and George Putnam

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

By analyzing existing cross correlation between Balanced Fund Retail and George Putnam Balanced, you can compare the effects of market volatilities on Balanced Fund and George Putnam 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 George Putnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and George Putnam.

Diversification Opportunities for Balanced Fund and George Putnam

0.99

Correlation Coefficient

Balanced Fund  George Putnam

No risk reduction

The 3 months correlation between Balanced and George is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and George Putnam Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Putnam Balanced 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 Retail are associated (or correlated) with George Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Putnam Balanced has no effect on the direction of Balanced Fund i.e., Balanced Fund and George Putnam go up and down completely randomly.

Pair Corralation between Balanced Fund and George Putnam

Assuming the 90 days horizon Balanced Fund Retail is expected to generate 1.06 times more return on investment than George Putnam. However, Balanced Fund is 1.06 times more volatile than George Putnam Balanced. It trades about -0.06 of its potential returns per unit of risk. George Putnam Balanced is currently generating about -0.08 per unit of risk. If you would invest  1,253  in Balanced Fund Retail on December 29, 2024 and sell it today you would lose (35.00) from holding Balanced Fund Retail or give up 2.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Balanced Fund Retail  vs.  George Putnam Balanced

Balanced Fund Retail

Risk-Adjusted Performance

Very Weak

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

George Putnam Balanced

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Balanced Fund and George Putnam

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

The idea behind Balanced Fund Retail and George Putnam Balanced 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.