Correlation Between Putnam Multicap and Dreyfus/standish

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

By analyzing existing cross correlation between Putnam Multicap Core and Dreyfusstandish Global Fixed, you can compare the effects of market volatilities on Putnam Multicap and Dreyfus/standish 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 Multicap with a short position of Dreyfus/standish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Multicap and Dreyfus/standish.

Diversification Opportunities for Putnam Multicap and Dreyfus/standish

0.4

Correlation Coefficient

Putnam Multicap  Dreyfus/standish

Very weak diversification

The 3 months correlation between Putnam and Dreyfus/standish is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Multicap Core and Dreyfusstandish Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfusstandish Global and Putnam Multicap 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 Multicap Core are associated (or correlated) with Dreyfus/standish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfusstandish Global has no effect on the direction of Putnam Multicap i.e., Putnam Multicap and Dreyfus/standish go up and down completely randomly.

Pair Corralation between Putnam Multicap and Dreyfus/standish

Assuming the 90 days horizon Putnam Multicap Core is expected to under-perform the Dreyfus/standish. In addition to that, Putnam Multicap is 3.38 times more volatile than Dreyfusstandish Global Fixed. It trades about -0.11 of its total potential returns per unit of risk. Dreyfusstandish Global Fixed is currently generating about 0.25 per unit of volatility. If you would invest  1,927  in Dreyfusstandish Global Fixed on December 2, 2024 and sell it today you would earn a total of  24.00  from holding Dreyfusstandish Global Fixed or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Putnam Multicap Core  vs.  Dreyfusstandish Global Fixed

Putnam Multicap Core

Risk-Adjusted Performance

Very Weak

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

Dreyfusstandish Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfusstandish Global Fixed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dreyfus/standish 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 Multicap and Dreyfus/standish

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

The idea behind Putnam Multicap Core and Dreyfusstandish Global Fixed 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.