Correlation Between Putnam Equity and American Mutual
Can any of the company-specific risk be diversified away by investing in both Putnam Equity and American Mutual 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 Equity and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Equity Income and American Mutual Fund, you can compare the effects of market volatilities on Putnam Equity and American Mutual 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 Equity with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and American Mutual.
Diversification Opportunities for Putnam Equity and American Mutual
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Putnam Equity 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 Equity Income are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Putnam Equity i.e., Putnam Equity and American Mutual go up and down completely randomly.
Pair Corralation between Putnam Equity and American Mutual
Assuming the 90 days horizon Putnam Equity Income is expected to generate 0.96 times more return on investment than American Mutual. However, Putnam Equity Income is 1.04 times less risky than American Mutual. It trades about -0.01 of its potential returns per unit of risk. American Mutual Fund is currently generating about -0.13 per unit of risk. If you would invest 3,367 in Putnam Equity Income on January 26, 2024 and sell it today you would lose (4.00) from holding Putnam Equity Income or give up 0.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Putnam Equity Income vs. American Mutual Fund
Performance |
Timeline |
Putnam Equity Me |
American Mutual |
Putnam Equity and American Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Putnam Equity and American Mutual
The main advantage of trading using opposite Putnam Equity and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity position performs unexpectedly, American Mutual 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 Mutual will offset losses from the drop in American Mutual's long position.Putnam Equity vs. Edgewood Growth Fund | Putnam Equity vs. Hartford Schroders Emerging | Putnam Equity vs. HUMANA INC | Putnam Equity vs. Aquagold International |
American Mutual vs. Loomis Sayles Growth | American Mutual vs. Diamond Hill Large | American Mutual vs. Champlain Small Pany | American Mutual vs. HUMANA INC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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