Correlation Between Sp Smallcap and George Putnam

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

By analyzing existing cross correlation between Sp Smallcap 600 and George Putnam Fund, you can compare the effects of market volatilities on Sp Smallcap and George Putnam 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 Sp Smallcap with a short position of George Putnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Smallcap and George Putnam.

Diversification Opportunities for Sp Smallcap and George Putnam

0.89

Correlation Coefficient

Sp Smallcap  George Putnam

Very poor diversification

The 3 months correlation between RYSVX and George is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sp Smallcap 600 and George Putnam Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Putnam and Sp Smallcap 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 Sp Smallcap 600 are associated (or correlated) with George Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Putnam has no effect on the direction of Sp Smallcap i.e., Sp Smallcap and George Putnam go up and down completely randomly.

Pair Corralation between Sp Smallcap and George Putnam

Assuming the 90 days horizon Sp Smallcap is expected to generate 1.22 times less return on investment than George Putnam. In addition to that, Sp Smallcap is 2.59 times more volatile than George Putnam Fund. It trades about 0.04 of its total potential returns per unit of risk. George Putnam Fund is currently generating about 0.12 per unit of volatility. If you would invest  2,155  in George Putnam Fund on October 9, 2024 and sell it today you would earn a total of  376.00  from holding George Putnam Fund or generate 17.45% return on investment over 90 days.

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

Sp Smallcap 600  vs.  George Putnam Fund

Sp Smallcap 600

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sp Smallcap 600 are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sp Smallcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

George Putnam

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in George Putnam Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, George Putnam is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sp Smallcap and George Putnam

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

The idea behind Sp Smallcap 600 and George Putnam Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.