Correlation Between George Putnam and Vanguard Information

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

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

Diversification Opportunities for George Putnam and Vanguard Information

0.36

Correlation Coefficient

George Putnam  Vanguard Information

Weak diversification

The 3 months correlation between George and Vanguard is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding George Putnam Balanced and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information and George Putnam 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 George Putnam Balanced are associated (or correlated) with Vanguard Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of George Putnam i.e., George Putnam and Vanguard Information go up and down completely randomly.

Pair Corralation between George Putnam and Vanguard Information

Assuming the 90 days horizon George Putnam is expected to generate 69.83 times less return on investment than Vanguard Information. But when comparing it to its historical volatility, George Putnam Balanced is 1.95 times less risky than Vanguard Information. It trades about 0.0 of its potential returns per unit of risk. Vanguard Information Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  28,925  in Vanguard Information Technology on September 15, 2024 and sell it today you would earn a total of  3,859  from holding Vanguard Information Technology or generate 13.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

George Putnam Balanced  vs.  Vanguard Information Technolog

George Putnam Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vanguard Information

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with George Putnam and Vanguard Information

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

The idea behind George Putnam Balanced and Vanguard Information Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.