Correlation Between Putnam Diversified and Grant Park

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

By analyzing existing cross correlation between Putnam Diversified Income and Grant Park Multi, you can compare the effects of market volatilities on Putnam Diversified and Grant Park 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 Diversified with a short position of Grant Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Diversified and Grant Park.

Diversification Opportunities for Putnam Diversified and Grant Park

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Correlation Coefficient

Putnam Diversified  Grant Park

Pay attention - limited upside

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

Pair Corralation between Putnam Diversified and Grant Park

Assuming the 90 days horizon Putnam Diversified Income is expected to generate 0.68 times more return on investment than Grant Park. However, Putnam Diversified Income is 1.46 times less risky than Grant Park. It trades about 0.07 of its potential returns per unit of risk. Grant Park Multi is currently generating about 0.01 per unit of risk. If you would invest  505.00  in Putnam Diversified Income on October 9, 2024 and sell it today you would earn a total of  48.00  from holding Putnam Diversified Income or generate 9.5% return on investment over 90 days.

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

Putnam Diversified Income  vs.  Grant Park Multi

Putnam Diversified Income

Risk-Adjusted Performance

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Very Weak

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

Grant Park Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grant Park Multi has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Grant Park 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 Diversified and Grant Park

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

The idea behind Putnam Diversified Income and Grant Park Multi 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 Transaction History module to view history of all your transactions and understand their impact on performance.