Correlation Between Praxis Small and Putnam Multicap
Can any of the company-specific risk be diversified away by investing in both Praxis Small 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 Praxis Small and Putnam Multicap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Praxis Small Cap and Putnam Multicap Core, you can compare the effects of market volatilities on Praxis Small 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 Praxis Small with a short position of Putnam Multicap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Small and Putnam Multicap.
Diversification Opportunities for Praxis Small and Putnam Multicap
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PRAXIS and Putnam is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap 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 Praxis Small 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 Praxis Small Cap 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 Praxis Small i.e., Praxis Small and Putnam Multicap go up and down completely randomly.
Pair Corralation between Praxis Small and Putnam Multicap
Assuming the 90 days horizon Praxis Small is expected to generate 1.31 times less return on investment than Putnam Multicap. In addition to that, Praxis Small is 1.52 times more volatile than Putnam Multicap Core. It trades about 0.05 of its total potential returns per unit of risk. Putnam Multicap Core is currently generating about 0.1 per unit of volatility. If you would invest 3,311 in Putnam Multicap Core on October 24, 2024 and sell it today you would earn a total of 1,131 from holding Putnam Multicap Core or generate 34.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.74% |
Values | Daily Returns |
Praxis Small Cap vs. Putnam Multicap Core
Performance |
Timeline |
Praxis Small Cap |
Putnam Multicap Core |
Praxis Small and Putnam Multicap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Praxis Small and Putnam Multicap
The main advantage of trading using opposite Praxis Small and Putnam Multicap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Small 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.Praxis Small vs. Rational Strategic Allocation | Praxis Small vs. T Rowe Price | Praxis Small vs. Delaware Limited Term Diversified | Praxis Small vs. Growth Fund Of |
Putnam Multicap vs. Jpmorgan High Yield | Putnam Multicap vs. T Rowe Price | Putnam Multicap vs. Pace High Yield | Putnam Multicap vs. Dunham High Yield |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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