Correlation Between Putnman Retirement and Income Fund

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

By analyzing existing cross correlation between Putnman Retirement Ready and Income Fund Of, you can compare the effects of market volatilities on Putnman Retirement and Income Fund 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 Putnman Retirement with a short position of Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnman Retirement and Income Fund.

Diversification Opportunities for Putnman Retirement and Income Fund

0.87

Correlation Coefficient

Putnman Retirement  Income Fund

Very poor diversification

The 3 months correlation between Putnman and Income is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Putnman Retirement Ready and Income Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund and Putnman Retirement 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 Putnman Retirement Ready are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of Putnman Retirement i.e., Putnman Retirement and Income Fund go up and down completely randomly.

Pair Corralation between Putnman Retirement and Income Fund

Assuming the 90 days horizon Putnman Retirement is expected to generate 1.12 times less return on investment than Income Fund. But when comparing it to its historical volatility, Putnman Retirement Ready is 1.23 times less risky than Income Fund. It trades about 0.11 of its potential returns per unit of risk. Income Fund Of is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,035  in Income Fund Of on December 4, 2024 and sell it today you would earn a total of  537.00  from holding Income Fund Of or generate 26.39% return on investment over 90 days.

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

Putnman Retirement Ready  vs.  Income Fund Of

Putnman Retirement Ready

Risk-Adjusted Performance

Very Weak

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

Income Fund

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Putnman Retirement and Income Fund

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

The idea behind Putnman Retirement Ready and Income Fund Of 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.