Correlation Between Nuveen Real and Putnam Small

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

By analyzing existing cross correlation between Nuveen Real Estate and Putnam Small Cap, you can compare the effects of market volatilities on Nuveen Real and Putnam Small 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 Nuveen Real with a short position of Putnam Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Real and Putnam Small.

Diversification Opportunities for Nuveen Real and Putnam Small

0.0

Correlation Coefficient

Nuveen Real  Putnam Small

Pay attention - limited upside

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

Pair Corralation between Nuveen Real and Putnam Small

If you would invest  1,445  in Nuveen Real Estate on December 20, 2024 and sell it today you would earn a total of  24.00  from holding Nuveen Real Estate or generate 1.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Nuveen Real Estate  vs.  Putnam Small Cap

Nuveen Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Real Estate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Small Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nuveen Real and Putnam Small

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

The idea behind Nuveen Real Estate and Putnam Small Cap 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.