Correlation Between Princeton Adaptive and Putnam Asia

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Can any of the company-specific risk be diversified away by investing in both Princeton Adaptive and Putnam Asia 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 Princeton Adaptive and Putnam Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Princeton Adaptive Premium and Putnam Asia Pacific, you can compare the effects of market volatilities on Princeton Adaptive and Putnam Asia 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 Princeton Adaptive with a short position of Putnam Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Princeton Adaptive and Putnam Asia.

Diversification Opportunities for Princeton Adaptive and Putnam Asia

PrincetonPutnamDiversified AwayPrincetonPutnamDiversified Away100%
0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Princeton and Putnam is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Princeton Adaptive Premium and Putnam Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Asia Pacific and Princeton Adaptive 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 Princeton Adaptive Premium are associated (or correlated) with Putnam Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Asia Pacific has no effect on the direction of Princeton Adaptive i.e., Princeton Adaptive and Putnam Asia go up and down completely randomly.

Pair Corralation between Princeton Adaptive and Putnam Asia

Assuming the 90 days horizon Princeton Adaptive Premium is expected to generate 0.98 times more return on investment than Putnam Asia. However, Princeton Adaptive Premium is 1.02 times less risky than Putnam Asia. It trades about -0.05 of its potential returns per unit of risk. Putnam Asia Pacific is currently generating about -0.06 per unit of risk. If you would invest  1,024  in Princeton Adaptive Premium on September 16, 2024 and sell it today you would lose (12.00) from holding Princeton Adaptive Premium or give up 1.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Princeton Adaptive Premium  vs.  Putnam Asia Pacific

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 0.51.01.5
JavaScript chart by amCharts 3.21.15PAPIX PAPAX
       Timeline  
Princeton Adaptive 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Princeton Adaptive Premium has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Princeton Adaptive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10.1510.210.2510.310.3510.4
Putnam Asia Pacific 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Putnam Asia Pacific has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnam Asia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec9.99.951010.0510.110.15

Princeton Adaptive and Putnam Asia Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.51-0.3-0.0982-0.04790.00.04530.09280.270.48 0.51.01.52.02.53.03.5
JavaScript chart by amCharts 3.21.15PAPIX PAPAX
       Returns  

Pair Trading with Princeton Adaptive and Putnam Asia

The main advantage of trading using opposite Princeton Adaptive and Putnam Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Princeton Adaptive position performs unexpectedly, Putnam Asia 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 Asia will offset losses from the drop in Putnam Asia's long position.
The idea behind Princeton Adaptive Premium and Putnam Asia Pacific 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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