Correlation Between Putnam Equity and George Putnam

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

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

Diversification Opportunities for Putnam Equity and George Putnam

-0.01

Correlation Coefficient

Putnam Equity  George Putnam

Good diversification

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

Pair Corralation between Putnam Equity and George Putnam

Assuming the 90 days horizon Putnam Equity Income is expected to under-perform the George Putnam. In addition to that, Putnam Equity is 1.87 times more volatile than George Putnam Balanced. It trades about -0.11 of its total potential returns per unit of risk. George Putnam Balanced is currently generating about 0.02 per unit of volatility. If you would invest  2,555  in George Putnam Balanced on September 23, 2024 and sell it today you would earn a total of  12.00  from holding George Putnam Balanced or generate 0.47% return on investment over 90 days.

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

Putnam Equity Income  vs.  George Putnam Balanced

Putnam Equity Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Equity Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

George Putnam Balanced

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in George Putnam Balanced are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, George Putnam 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 Equity and George Putnam

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

The idea behind Putnam Equity Income and George Putnam Balanced 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.