Correlation Between Micron Technology and Putnam Dynamic
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Putnam Dynamic 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 Micron Technology and Putnam Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Putnam Dynamic Asset, you can compare the effects of market volatilities on Micron Technology and Putnam Dynamic 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 Micron Technology with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Putnam Dynamic.
Diversification Opportunities for Micron Technology and Putnam Dynamic
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and Putnam is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Putnam Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Dynamic Asset and Micron Technology 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 Micron Technology are associated (or correlated) with Putnam Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Dynamic Asset has no effect on the direction of Micron Technology i.e., Micron Technology and Putnam Dynamic go up and down completely randomly.
Pair Corralation between Micron Technology and Putnam Dynamic
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.82 times more return on investment than Putnam Dynamic. However, Micron Technology is 3.82 times more volatile than Putnam Dynamic Asset. It trades about 0.07 of its potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.07 per unit of risk. If you would invest 4,949 in Micron Technology on September 20, 2024 and sell it today you would earn a total of 5,911 from holding Micron Technology or generate 119.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Micron Technology vs. Putnam Dynamic Asset
Performance |
Timeline |
Micron Technology |
Putnam Dynamic Asset |
Micron Technology and Putnam Dynamic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and Putnam Dynamic
The main advantage of trading using opposite Micron Technology and Putnam Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Putnam Dynamic 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 Dynamic will offset losses from the drop in Putnam Dynamic's long position.The idea behind Micron Technology and Putnam Dynamic Asset 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.Putnam Dynamic vs. Putnam International Equity | Putnam Dynamic vs. Putnam Equity Income | Putnam Dynamic vs. Putnam Income Fund | Putnam Dynamic vs. Putnam Global Equity |
Check out your portfolio center.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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