Correlation Between George Putnam and American Balanced
Can any of the company-specific risk be diversified away by investing in both George Putnam and American Balanced 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 American Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between George Putnam Fund and American Balanced, you can compare the effects of market volatilities on George Putnam and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of George Putnam and American Balanced.
Diversification Opportunities for George Putnam and American Balanced
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between George and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding George Putnam Fund and American Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 Fund are associated (or correlated) with American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of George Putnam i.e., George Putnam and American Balanced go up and down completely randomly.
Pair Corralation between George Putnam and American Balanced
Assuming the 90 days horizon George Putnam Fund is expected to under-perform the American Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, George Putnam Fund is 1.07 times less risky than American Balanced. The mutual fund trades about -0.33 of its potential returns per unit of risk. The American Balanced is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 3,360 in American Balanced on January 20, 2024 and sell it today you would lose (92.00) from holding American Balanced or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
George Putnam Fund vs. American Balanced
Performance |
| Timeline |
| George Putnam |
| American Balanced |
George Putnam and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with George Putnam and American Balanced
The main advantage of trading using opposite George Putnam and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if George Putnam position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| George Putnam vs. Putnam International Equity | George Putnam vs. Putnam Equity Income | George Putnam vs. Putnam Income Fund | George Putnam vs. Putnam Global Equity |
| American Balanced vs. Income Fund Of | American Balanced vs. New World Fund | American Balanced vs. American Mutual Fund | American Balanced vs. American Mutual Fund |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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