Correlation Between Pace Large and Putnam Diversified

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

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

Diversification Opportunities for Pace Large and Putnam Diversified

0.0

Correlation Coefficient

Pace Large  Putnam Diversified

Pay attention - limited upside

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

Pair Corralation between Pace Large and Putnam Diversified

If you would invest  553.00  in Putnam Diversified Income on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Putnam Diversified Income or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pace Large Growth  vs.  Putnam Diversified Income

Pace Large Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Large Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Putnam Diversified Income

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Pace Large and Putnam Diversified

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

The idea behind Pace Large Growth and Putnam Diversified Income 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.