Correlation Between Putnam Ultra and Short-term Fund

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

By analyzing existing cross correlation between Putnam Ultra Short and Short Term Fund Administrative, you can compare the effects of market volatilities on Putnam Ultra and Short-term Fund 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 Ultra with a short position of Short-term Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Ultra and Short-term Fund.

Diversification Opportunities for Putnam Ultra and Short-term Fund

0.96

Correlation Coefficient

Putnam Ultra  Short-term Fund

Almost no diversification

The 3 months correlation between Putnam and Short-term is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Ultra Short and Short Term Fund Administrative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Fund and Putnam Ultra 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 Ultra Short are associated (or correlated) with Short-term Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Fund has no effect on the direction of Putnam Ultra i.e., Putnam Ultra and Short-term Fund go up and down completely randomly.

Pair Corralation between Putnam Ultra and Short-term Fund

Assuming the 90 days horizon Putnam Ultra Short is not expected to generate positive returns. Moreover, Putnam Ultra is 1.12 times more volatile than Short Term Fund Administrative. It trades away all of its potential returns to assume current level of volatility. Short Term Fund Administrative is currently generating about 0.13 per unit of risk. If you would invest  964.00  in Short Term Fund Administrative on March 5, 2024 and sell it today you would earn a total of  1.00  from holding Short Term Fund Administrative or generate 0.1% return on investment over 90 days.

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

Putnam Ultra Short  vs.  Short Term Fund Administrative

Putnam Ultra Short

Risk-Adjusted Performance

11 of 100

Good

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

Short Term Fund

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund Administrative are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short-term Fund 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 Ultra and Short-term Fund

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

The idea behind Putnam Ultra Short and Short Term Fund Administrative 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..