Correlation Between Putnam Diversified and Frontier Mfg
Can any of the company-specific risk be diversified away by investing in both Putnam Diversified and Frontier Mfg 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 Frontier Mfg 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 Frontier Mfg E, you can compare the effects of market volatilities on Putnam Diversified and Frontier Mfg 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 Frontier Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Diversified and Frontier Mfg.
Diversification Opportunities for Putnam Diversified and Frontier Mfg
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Frontier is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Diversified Income and Frontier Mfg E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg E 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 Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg E has no effect on the direction of Putnam Diversified i.e., Putnam Diversified and Frontier Mfg go up and down completely randomly.
Pair Corralation between Putnam Diversified and Frontier Mfg
Assuming the 90 days horizon Putnam Diversified is expected to generate 4.69 times less return on investment than Frontier Mfg. But when comparing it to its historical volatility, Putnam Diversified Income is 3.35 times less risky than Frontier Mfg. It trades about 0.08 of its potential returns per unit of risk. Frontier Mfg E is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,656 in Frontier Mfg E on August 29, 2025 and sell it today you would earn a total of 62.00 from holding Frontier Mfg E or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Diversified Income vs. Frontier Mfg E
Performance |
| Timeline |
| Putnam Diversified Income |
| Frontier Mfg E |
Putnam Diversified and Frontier Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Diversified and Frontier Mfg
The main advantage of trading using opposite Putnam Diversified and Frontier Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Diversified position performs unexpectedly, Frontier Mfg 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 Frontier Mfg will offset losses from the drop in Frontier Mfg's long position.| Putnam Diversified vs. Putnam Equity Income | Putnam Diversified vs. Putnam Tax Exempt | Putnam Diversified vs. Putnam Floating Rate | Putnam Diversified vs. Putnam High Yield |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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