Correlation Between Putnam Dynamic and Putnam U

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

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

Diversification Opportunities for Putnam Dynamic and Putnam U

0.01

Correlation Coefficient

Putnam Dynamic  Putnam U

Significant diversification

The 3 months correlation between Putnam and Putnam is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Dynamic Asset and Putnam U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam U S and Putnam Dynamic 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 Putnam Dynamic Asset are associated (or correlated) with Putnam U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam U S has no effect on the direction of Putnam Dynamic i.e., Putnam Dynamic and Putnam U go up and down completely randomly.

Pair Corralation between Putnam Dynamic and Putnam U

Assuming the 90 days horizon Putnam Dynamic Asset is expected to generate 1.24 times more return on investment than Putnam U. However, Putnam Dynamic is 1.24 times more volatile than Putnam U S. It trades about 0.12 of its potential returns per unit of risk. Putnam U S is currently generating about -0.1 per unit of risk. If you would invest  1,730  in Putnam Dynamic Asset on September 14, 2024 and sell it today you would earn a total of  55.00  from holding Putnam Dynamic Asset or generate 3.18% return on investment over 90 days.

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

Putnam Dynamic Asset  vs.  Putnam U S

Putnam Dynamic Asset

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Dynamic Asset are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam U S

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Putnam Dynamic and Putnam U

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

The idea behind Putnam Dynamic Asset and Putnam U S 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.