Correlation Between Putnam Diversified and Equity Income
Can any of the company-specific risk be diversified away by investing in both Putnam Diversified and Equity Income 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 Equity Income 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 Equity Income Fund, you can compare the effects of market volatilities on Putnam Diversified and Equity Income 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 Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Diversified and Equity Income.
Diversification Opportunities for Putnam Diversified and Equity Income
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Equity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Diversified Income and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income 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 Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Putnam Diversified i.e., Putnam Diversified and Equity Income go up and down completely randomly.
Pair Corralation between Putnam Diversified and Equity Income
Assuming the 90 days horizon Putnam Diversified is expected to generate 2.7 times less return on investment than Equity Income. But when comparing it to its historical volatility, Putnam Diversified Income is 3.1 times less risky than Equity Income. It trades about 0.24 of its potential returns per unit of risk. Equity Income Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 846.00 in Equity Income Fund on June 4, 2025 and sell it today you would earn a total of 61.00 from holding Equity Income Fund or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Diversified Income vs. Equity Income Fund
Performance |
| Timeline |
| Putnam Diversified Income |
| Equity Income |
Putnam Diversified and Equity Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Diversified and Equity Income
The main advantage of trading using opposite Putnam Diversified and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Diversified position performs unexpectedly, Equity Income 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 Equity Income will offset losses from the drop in Equity Income's long position.| Putnam Diversified vs. Touchstone Small Cap | Putnam Diversified vs. Nuveen Nwq Smallmid Cap | Putnam Diversified vs. Pace Smallmedium Value | Putnam Diversified vs. Siit Small Cap |
| Equity Income vs. Scharf Global Opportunity | Equity Income vs. Gamco Global Opportunity | Equity Income vs. Calvert Global Energy | Equity Income vs. Morningstar Global Income |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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