Correlation Between T Rowe and Great-west Putnam

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

By analyzing existing cross correlation between T Rowe Price and Great West Putnam High, you can compare the effects of market volatilities on T Rowe and Great-west 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 T Rowe with a short position of Great-west Putnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Great-west Putnam.

Diversification Opportunities for T Rowe and Great-west Putnam

0.87

Correlation Coefficient

T Rowe  Great-west Putnam

Very poor diversification

The 3 months correlation between TRRJX and GREAT-WEST is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Great West Putnam High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Putnam and T Rowe 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 T Rowe Price are associated (or correlated) with Great-west Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Putnam has no effect on the direction of T Rowe i.e., T Rowe and Great-west Putnam go up and down completely randomly.

Pair Corralation between T Rowe and Great-west Putnam

Assuming the 90 days horizon T Rowe Price is expected to generate 2.68 times more return on investment than Great-west Putnam. However, T Rowe is 2.68 times more volatile than Great West Putnam High. It trades about 0.14 of its potential returns per unit of risk. Great West Putnam High is currently generating about 0.28 per unit of risk. If you would invest  2,136  in T Rowe Price on September 3, 2024 and sell it today you would earn a total of  96.00  from holding T Rowe Price or generate 4.49% return on investment over 90 days.

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

T Rowe Price  vs.  Great West Putnam High

T Rowe Price

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, T Rowe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Putnam

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Putnam High are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west 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 T Rowe and Great-west Putnam

The main advantage of trading using opposite T Rowe and Great-west Putnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Great-west 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 Great-west Putnam will offset losses from the drop in Great-west Putnam's long position.

The idea behind T Rowe Price and Great West Putnam High 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.