Correlation Between Putnam Small and Putnam Ultra

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

By analyzing existing cross correlation between Putnam Small Cap and Putnam Ultra Short, you can compare the effects of market volatilities on Putnam Small and Putnam Ultra 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 Small with a short position of Putnam Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Small and Putnam Ultra.

Diversification Opportunities for Putnam Small and Putnam Ultra

0.0

Correlation Coefficient

Putnam Small  Putnam Ultra

Pay attention - limited upside

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

Pair Corralation between Putnam Small and Putnam Ultra

If you would invest  1,003  in Putnam Ultra Short on November 29, 2024 and sell it today you would earn a total of  9.00  from holding Putnam Ultra Short or generate 0.9% return on investment over 90 days.

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

Putnam Small Cap  vs.  Putnam Ultra Short

Putnam Small Cap

Risk-Adjusted Performance

Very Weak

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

Putnam Ultra Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Ultra Short are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Ultra 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 Small and Putnam Ultra

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

The idea behind Putnam Small Cap and Putnam Ultra Short 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.