Correlation Between Volumetric Fund and Putnam Multicap

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

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

Diversification Opportunities for Volumetric Fund and Putnam Multicap

0.94

Correlation Coefficient

Volumetric Fund  Putnam Multicap

Almost no diversification

The 3 months correlation between Volumetric and Putnam is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Volumetric Fund Volumetric and Putnam Multicap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multicap Core and Volumetric Fund 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 Volumetric Fund Volumetric are associated (or correlated) with Putnam Multicap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multicap Core has no effect on the direction of Volumetric Fund i.e., Volumetric Fund and Putnam Multicap go up and down completely randomly.

Pair Corralation between Volumetric Fund and Putnam Multicap

Assuming the 90 days horizon Volumetric Fund Volumetric is expected to under-perform the Putnam Multicap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Volumetric Fund Volumetric is 1.19 times less risky than Putnam Multicap. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Putnam Multicap Core is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,320  in Putnam Multicap Core on December 31, 2024 and sell it today you would lose (227.00) from holding Putnam Multicap Core or give up 5.25% of portfolio value over 90 days.

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

Volumetric Fund Volumetric  vs.  Putnam Multicap Core

Volumetric Fund Volu

Risk-Adjusted Performance

Very Weak

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

Putnam Multicap Core

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Volumetric Fund and Putnam Multicap

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

The idea behind Volumetric Fund Volumetric and Putnam Multicap Core 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.