Correlation Between Deutsche Health and Putnam Money

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

By analyzing existing cross correlation between Deutsche Health And and Putnam Money Market, you can compare the effects of market volatilities on Deutsche Health and Putnam Money 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 Deutsche Health with a short position of Putnam Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Health and Putnam Money.

Diversification Opportunities for Deutsche Health and Putnam Money

0.0

Correlation Coefficient

Deutsche Health  Putnam Money

Pay attention - limited upside

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

Pair Corralation between Deutsche Health and Putnam Money

Assuming the 90 days horizon Deutsche Health is expected to generate 1.4 times less return on investment than Putnam Money. In addition to that, Deutsche Health is 1.06 times more volatile than Putnam Money Market. It trades about 0.02 of its total potential returns per unit of risk. Putnam Money Market is currently generating about 0.03 per unit of volatility. If you would invest  92.00  in Putnam Money Market on September 29, 2024 and sell it today you would earn a total of  8.00  from holding Putnam Money Market or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.37%
Values	Daily Returns

Deutsche Health And  vs.  Putnam Money Market

Deutsche Health And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Health And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Putnam Money Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Deutsche Health and Putnam Money

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

The idea behind Deutsche Health And and Putnam Money Market 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.