Correlation Between Smallcap Fund and Putnam Multicap
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund and Putnam Multicap 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 Smallcap Fund and Putnam Multicap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Putnam Multicap Core, you can compare the effects of market volatilities on Smallcap Fund and Putnam Multicap 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 Smallcap Fund with a short position of Putnam Multicap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Putnam Multicap.
Diversification Opportunities for Smallcap Fund and Putnam Multicap
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smallcap and Putnam is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Putnam Multicap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multicap Core and Smallcap Fund 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 Smallcap Fund Fka are associated (or correlated) with Putnam Multicap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multicap Core has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Putnam Multicap go up and down completely randomly.
Pair Corralation between Smallcap Fund and Putnam Multicap
Assuming the 90 days horizon Smallcap Fund Fka is expected to under-perform the Putnam Multicap. In addition to that, Smallcap Fund is 1.38 times more volatile than Putnam Multicap Core. It trades about -0.25 of its total potential returns per unit of risk. Putnam Multicap Core is currently generating about -0.08 per unit of volatility. If you would invest 4,461 in Putnam Multicap Core on October 9, 2024 and sell it today you would lose (75.00) from holding Putnam Multicap Core or give up 1.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Smallcap Fund Fka vs. Putnam Multicap Core
Performance |
Timeline |
Smallcap Fund Fka |
Putnam Multicap Core |
Smallcap Fund and Putnam Multicap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smallcap Fund and Putnam Multicap
The main advantage of trading using opposite Smallcap Fund and Putnam Multicap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund position performs unexpectedly, Putnam Multicap 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 Multicap will offset losses from the drop in Putnam Multicap's long position.Smallcap Fund vs. Strategic Asset Management | Smallcap Fund vs. Strategic Asset Management | Smallcap Fund vs. Strategic Asset Management | Smallcap Fund vs. Strategic Asset Management |
Putnam Multicap vs. Clearbridge Energy Mlp | Putnam Multicap vs. Oil Gas Ultrasector | Putnam Multicap vs. Transamerica Mlp Energy | Putnam Multicap vs. Jennison Natural Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |