Correlation Between Putnman Retirement and Century Small

Can any of the company-specific risk be diversified away by investing in both Putnman Retirement and Century Small 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 Century Small 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 Century Small Cap, you can compare the effects of market volatilities on Putnman Retirement and Century Small 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 Century Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnman Retirement and Century Small.

Diversification Opportunities for Putnman Retirement and Century Small

0.56

Correlation Coefficient

Putnman Retirement  Century Small

Very weak diversification

The 3 months correlation between Putnman and Century is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Putnman Retirement Ready and Century Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Small Cap 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 Century Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Small Cap has no effect on the direction of Putnman Retirement i.e., Putnman Retirement and Century Small go up and down completely randomly.

Pair Corralation between Putnman Retirement and Century Small

Assuming the 90 days horizon Putnman Retirement Ready is expected to generate 0.34 times more return on investment than Century Small. However, Putnman Retirement Ready is 2.95 times less risky than Century Small. It trades about -0.08 of its potential returns per unit of risk. Century Small Cap is currently generating about -0.17 per unit of risk. If you would invest  2,581  in Putnman Retirement Ready on December 4, 2024 and sell it today you would lose (54.00) from holding Putnman Retirement Ready or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Putnman Retirement Ready  vs.  Century Small Cap

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.

Century Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of unfluctuating performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Putnman Retirement and Century Small

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

The idea behind Putnman Retirement Ready and Century Small Cap 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.