Correlation Between Putnam Growth and George Putnam

Can any of the company-specific risk be diversified away by investing in both Putnam Growth 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 Growth 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 Growth Opportunities and George Putnam Balanced, you can compare the effects of market volatilities on Putnam Growth 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 Growth with a short position of George Putnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Growth and George Putnam.

Diversification Opportunities for Putnam Growth and George Putnam

0.84

Correlation Coefficient

Putnam Growth  George Putnam

Very poor diversification

The 3 months correlation between Putnam and George is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Growth Opportunities 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 Growth 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 Growth Opportunities 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 Growth i.e., Putnam Growth and George Putnam go up and down completely randomly.

Pair Corralation between Putnam Growth and George Putnam

Assuming the 90 days horizon Putnam Growth Opportunities is expected to generate 1.93 times more return on investment than George Putnam. However, Putnam Growth is 1.93 times more volatile than George Putnam Balanced. It trades about 0.12 of its potential returns per unit of risk. George Putnam Balanced is currently generating about 0.13 per unit of risk. If you would invest  5,766  in Putnam Growth Opportunities on September 4, 2024 and sell it today you would earn a total of  2,094  from holding Putnam Growth Opportunities or generate 36.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Putnam Growth Opportunities  vs.  George Putnam Balanced

Putnam Growth Opport

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Growth Opportunities are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Putnam Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

George Putnam Balanced

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in George Putnam Balanced are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Putnam Growth and George Putnam

The main advantage of trading using opposite Putnam Growth and George Putnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Growth 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 Growth Opportunities 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.