Correlation Between Strategic Allocation and Putnam Dynamic

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

By analyzing existing cross correlation between Strategic Allocation Aggressive and Putnam Dynamic Asset, you can compare the effects of market volatilities on Strategic Allocation and Putnam Dynamic 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 Strategic Allocation with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation and Putnam Dynamic.

Diversification Opportunities for Strategic Allocation and Putnam Dynamic

0.95

Correlation Coefficient

Strategic Allocation  Putnam Dynamic

Almost no diversification

The 3 months correlation between Strategic and Putnam is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Aggressiv and Putnam Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Dynamic Asset and Strategic Allocation 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 Strategic Allocation Aggressive are associated (or correlated) with Putnam Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Dynamic Asset has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Putnam Dynamic go up and down completely randomly.

Pair Corralation between Strategic Allocation and Putnam Dynamic

Assuming the 90 days horizon Strategic Allocation is expected to generate 1.36 times less return on investment than Putnam Dynamic. In addition to that, Strategic Allocation is 1.04 times more volatile than Putnam Dynamic Asset. It trades about 0.16 of its total potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.22 per unit of volatility. If you would invest  1,771  in Putnam Dynamic Asset on September 13, 2024 and sell it today you would earn a total of  31.00  from holding Putnam Dynamic Asset or generate 1.75% return on investment over 90 days.

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

Strategic Allocation Aggressiv  vs.  Putnam Dynamic Asset

Strategic Allocation

Risk-Adjusted Performance

11 of 100

Good

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

Putnam Dynamic Asset

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Dynamic Asset are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strategic Allocation and Putnam Dynamic

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

The idea behind Strategic Allocation Aggressive and Putnam Dynamic Asset 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.