Correlation Between Rbc Microcap and Putnam Focused

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

By analyzing existing cross correlation between Rbc Microcap Value and Putnam Focused Equity, you can compare the effects of market volatilities on Rbc Microcap and Putnam Focused 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 Rbc Microcap with a short position of Putnam Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Microcap and Putnam Focused.

Diversification Opportunities for Rbc Microcap and Putnam Focused

0.73

Correlation Coefficient

Rbc Microcap  Putnam Focused

Poor diversification

The 3 months correlation between Rbc and Putnam is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Microcap Value and Putnam Focused Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Equity and Rbc Microcap 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 Rbc Microcap Value are associated (or correlated) with Putnam Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Focused Equity has no effect on the direction of Rbc Microcap i.e., Rbc Microcap and Putnam Focused go up and down completely randomly.

Pair Corralation between Rbc Microcap and Putnam Focused

Assuming the 90 days horizon Rbc Microcap Value is expected to under-perform the Putnam Focused. In addition to that, Rbc Microcap is 1.19 times more volatile than Putnam Focused Equity. It trades about -0.14 of its total potential returns per unit of risk. Putnam Focused Equity is currently generating about -0.02 per unit of volatility. If you would invest  3,596  in Putnam Focused Equity on December 4, 2024 and sell it today you would lose (15.00) from holding Putnam Focused Equity or give up 0.42% of portfolio value over 90 days.

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

Rbc Microcap Value  vs.  Putnam Focused Equity

Rbc Microcap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rbc Microcap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Putnam Focused Equity

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Rbc Microcap and Putnam Focused

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

The idea behind Rbc Microcap Value and Putnam Focused Equity 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.