Correlation Between Tiaa Cref and Putnam Multi-cap

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

By analyzing existing cross correlation between Tiaa Cref Lifestyle Moderate and Putnam Multi Cap Growth, you can compare the effects of market volatilities on Tiaa Cref and Putnam Multi-cap 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 Tiaa Cref with a short position of Putnam Multi-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa Cref and Putnam Multi-cap.

Diversification Opportunities for Tiaa Cref and Putnam Multi-cap

0.73

Correlation Coefficient

Tiaa Cref  Putnam Multi-cap

Poor diversification

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

Pair Corralation between Tiaa Cref and Putnam Multi-cap

Assuming the 90 days horizon Tiaa Cref Lifestyle Moderate is expected to under-perform the Putnam Multi-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Lifestyle Moderate is 1.62 times less risky than Putnam Multi-cap. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Putnam Multi Cap Growth is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  11,991  in Putnam Multi Cap Growth on October 9, 2024 and sell it today you would lose (335.00) from holding Putnam Multi Cap Growth or give up 2.79% of portfolio value over 90 days.

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

Tiaa Cref Lifestyle Moderate  vs.  Putnam Multi Cap Growth

Tiaa Cref Lifestyle

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam Multi Cap

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Tiaa Cref and Putnam Multi-cap

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

The idea behind Tiaa Cref Lifestyle Moderate and Putnam Multi Cap Growth 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.