Correlation Between Putnam Diversified and Vy(r) T

Can any of the company-specific risk be diversified away by investing in both Putnam Diversified and Vy(r) T 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 Diversified and Vy(r) T into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Putnam Diversified Income and Vy T Rowe, you can compare the effects of market volatilities on Putnam Diversified and Vy(r) T 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 Diversified with a short position of Vy(r) T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Diversified and Vy(r) T.

Diversification Opportunities for Putnam Diversified and Vy(r) T

0.87

Correlation Coefficient

Putnam Diversified  Vy(r) T

Very poor diversification

The 3 months correlation between Putnam and Vy(r) is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Diversified Income and Vy T Rowe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy T Rowe and Putnam Diversified 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 Diversified Income are associated (or correlated) with Vy(r) T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy T Rowe has no effect on the direction of Putnam Diversified i.e., Putnam Diversified and Vy(r) T go up and down completely randomly.

Pair Corralation between Putnam Diversified and Vy(r) T

Assuming the 90 days horizon Putnam Diversified is expected to generate 8.83 times less return on investment than Vy(r) T. But when comparing it to its historical volatility, Putnam Diversified Income is 9.17 times less risky than Vy(r) T. It trades about 0.13 of its potential returns per unit of risk. Vy T Rowe is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,061  in Vy T Rowe on March 30, 2025 and sell it today you would earn a total of  190.00  from holding Vy T Rowe or generate 17.91% return on investment over 90 days.

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

Putnam Diversified Income  vs.  Vy T Rowe

Putnam Diversified Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Diversified Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vy T Rowe

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vy T Rowe are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vy(r) T showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putnam Diversified and Vy(r) T

The main advantage of trading using opposite Putnam Diversified and Vy(r) T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Diversified position performs unexpectedly, Vy(r) T 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 Vy(r) T will offset losses from the drop in Vy(r) T's long position.

The idea behind Putnam Diversified Income and Vy T Rowe 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 Transaction History module to view history of all your transactions and understand their impact on performance.