Correlation Between Government Securities and Putnam Multi

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

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

Diversification Opportunities for Government Securities and Putnam Multi

-0.48

Correlation Coefficient

Government Securities  Putnam Multi

Very good diversification

The 3 months correlation between Government and Putnam is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund 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 Government Securities 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 Government Securities Fund are associated (or correlated) with Putnam Multi. 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 Government Securities i.e., Government Securities and Putnam Multi go up and down completely randomly.

Pair Corralation between Government Securities and Putnam Multi

Assuming the 90 days horizon Government Securities Fund is expected to generate 0.19 times more return on investment than Putnam Multi. However, Government Securities Fund is 5.2 times less risky than Putnam Multi. It trades about -0.11 of its potential returns per unit of risk. Putnam Multi Cap Growth is currently generating about -0.03 per unit of risk. If you would invest  901.00  in Government Securities Fund on September 12, 2024 and sell it today you would lose (15.00) from holding Government Securities Fund or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Government Securities Fund  vs.  Putnam Multi Cap Growth

Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Government Securities Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Government Securities 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

Very 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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Government Securities and Putnam Multi

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

The idea behind Government Securities Fund 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.