Correlation Between Putnam Focused and American Century

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

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

Diversification Opportunities for Putnam Focused and American Century

0.0

Correlation Coefficient

Putnam Focused  American Century

Pay attention - limited upside

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

Pair Corralation between Putnam Focused and American Century

If you would invest (100.00) in American Century Sustainable on December 29, 2024 and sell it today you would earn a total of  100.00  from holding American Century Sustainable or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Putnam Focused Large  vs.  American Century Sustainable

Putnam Focused Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Focused Large has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

American Century Sus

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Putnam Focused and American Century

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

The idea behind Putnam Focused Large and American Century Sustainable 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.