Correlation Between Allianzgi Health and Putnam Multi

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

By analyzing existing cross correlation between Allianzgi Health Sciences and Putnam Multi Cap Growth, you can compare the effects of market volatilities on Allianzgi Health and Putnam Multi 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 Allianzgi Health with a short position of Putnam Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Health and Putnam Multi.

Diversification Opportunities for Allianzgi Health and Putnam Multi

-0.19

Correlation Coefficient

Allianzgi Health  Putnam Multi

Good diversification

The 3 months correlation between Allianzgi and Putnam is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Health Sciences and Putnam Multi Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multi Cap and Allianzgi Health 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 Allianzgi Health Sciences are associated (or correlated) with Putnam Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multi Cap has no effect on the direction of Allianzgi Health i.e., Allianzgi Health and Putnam Multi go up and down completely randomly.

Pair Corralation between Allianzgi Health and Putnam Multi

Assuming the 90 days horizon Allianzgi Health Sciences is expected to under-perform the Putnam Multi. But the mutual fund apears to be less risky and, when comparing its historical volatility, Allianzgi Health Sciences is 1.01 times less risky than Putnam Multi. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Putnam Multi Cap Growth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,404  in Putnam Multi Cap Growth on September 28, 2024 and sell it today you would earn a total of  171.00  from holding Putnam Multi Cap Growth or generate 1.38% return on investment over 90 days.

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

Allianzgi Health Sciences  vs.  Putnam Multi Cap Growth

Allianzgi Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam Multi Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Multi Cap Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allianzgi Health and Putnam Multi

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

The idea behind Allianzgi Health Sciences and Putnam Multi Cap Growth 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.