Correlation Between Putnam Multi and Putnam Equity

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Putnam Multi and Putnam Equity 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 Multi and Putnam Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Multi Cap Growth and Putnam Equity Income, you can compare the effects of market volatilities on Putnam Multi and Putnam Equity 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 Multi with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Multi and Putnam Equity.

Diversification Opportunities for Putnam Multi and Putnam Equity

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Putnam and Putnam is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Multi Cap Growth and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Putnam Multi 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 Multi Cap Growth are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Putnam Multi i.e., Putnam Multi and Putnam Equity go up and down completely randomly.

Pair Corralation between Putnam Multi and Putnam Equity

Assuming the 90 days horizon Putnam Multi Cap Growth is expected to generate 1.41 times more return on investment than Putnam Equity. However, Putnam Multi is 1.41 times more volatile than Putnam Equity Income. It trades about -0.24 of its potential returns per unit of risk. Putnam Equity Income is currently generating about -0.38 per unit of risk. If you would invest  15,445  in Putnam Multi Cap Growth on September 23, 2024 and sell it today you would lose (1,438) from holding Putnam Multi Cap Growth or give up 9.31% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Putnam Multi Cap Growth  vs.  Putnam Equity Income

 Performance 
       Timeline  
Putnam Multi Cap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Putnam Multi Cap 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 Equity Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Putnam Equity Income 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 Multi and Putnam Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Putnam Multi and Putnam Equity

The main advantage of trading using opposite Putnam Multi and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Multi position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.
The idea behind Putnam Multi Cap Growth and Putnam Equity 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Transaction History
View history of all your transactions and understand their impact on performance
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk