Correlation Between Putnam Short and Oak Harvest

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

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

Diversification Opportunities for Putnam Short and Oak Harvest

0.81

Correlation Coefficient

Putnam Short  Oak Harvest

Very poor diversification

The 3 months correlation between Putnam and Oak is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Short Duration and Oak Harvest Longshrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Harvest Longshrt and Putnam Short 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 Short Duration are associated (or correlated) with Oak Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Harvest Longshrt has no effect on the direction of Putnam Short i.e., Putnam Short and Oak Harvest go up and down completely randomly.

Pair Corralation between Putnam Short and Oak Harvest

Assuming the 90 days horizon Putnam Short Duration is expected to generate 0.07 times more return on investment than Oak Harvest. However, Putnam Short Duration is 13.58 times less risky than Oak Harvest. It trades about -0.09 of its potential returns per unit of risk. Oak Harvest Longshrt is currently generating about -0.22 per unit of risk. If you would invest  1,011  in Putnam Short Duration on October 15, 2024 and sell it today you would lose (1.00) from holding Putnam Short Duration or give up 0.1% of portfolio value over 90 days.

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

Putnam Short Duration  vs.  Oak Harvest Longshrt

Putnam Short Duration

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Short Duration are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Putnam Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oak Harvest Longshrt

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Harvest Longshrt are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Oak Harvest 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 Short and Oak Harvest

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

The idea behind Putnam Short Duration and Oak Harvest Longshrt 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.