Correlation Between Pgim Conservative and Putnam Equity

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

By analyzing existing cross correlation between Pgim Conservative Retirement and Putnam Equity Income, you can compare the effects of market volatilities on Pgim Conservative and Putnam Equity 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 Pgim Conservative with a short position of Putnam Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pgim Conservative and Putnam Equity.

Diversification Opportunities for Pgim Conservative and Putnam Equity

0.28

Correlation Coefficient

Pgim Conservative  Putnam Equity

Modest diversification

The 3 months correlation between Pgim and Putnam is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Conservative Retirement and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Pgim Conservative 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 Pgim Conservative Retirement are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Pgim Conservative i.e., Pgim Conservative and Putnam Equity go up and down completely randomly.

Pair Corralation between Pgim Conservative and Putnam Equity

Assuming the 90 days horizon Pgim Conservative is expected to generate 2.24 times less return on investment than Putnam Equity. But when comparing it to its historical volatility, Pgim Conservative Retirement is 2.12 times less risky than Putnam Equity. It trades about 0.14 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,592  in Putnam Equity Income on September 4, 2024 and sell it today you would earn a total of  213.00  from holding Putnam Equity Income or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Pgim Conservative Retirement  vs.  Putnam Equity Income

Pgim Conservative

Risk-Adjusted Performance

11 of 100

Good

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

Putnam Equity Income

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Pgim Conservative and Putnam Equity

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

The idea behind Pgim Conservative Retirement and Putnam Equity Income 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.

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.