Correlation Between Putnam Multicap and Vanguard Total

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

By analyzing existing cross correlation between Putnam Multicap Core and Vanguard Total Stock, you can compare the effects of market volatilities on Putnam Multicap and Vanguard Total 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 Multicap with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Multicap and Vanguard Total.

Diversification Opportunities for Putnam Multicap and Vanguard Total

0.0

Correlation Coefficient

Putnam Multicap  Vanguard Total

Pay attention - limited upside

The 3 months correlation between Putnam and Vanguard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Multicap Core and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Putnam Multicap 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 Multicap Core are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Putnam Multicap i.e., Putnam Multicap and Vanguard Total go up and down completely randomly.

Pair Corralation between Putnam Multicap and Vanguard Total

If you would invest  12,552  in Vanguard Total Stock on February 23, 2024 and sell it today you would earn a total of  98.00  from holding Vanguard Total Stock or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Putnam Multicap Core  vs.  Vanguard Total Stock

Putnam Multicap Core

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Putnam Multicap Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Putnam Multicap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total Stock

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Vanguard Total 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 Multicap and Vanguard Total

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

The idea behind Putnam Multicap Core and Vanguard Total Stock 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.