Correlation Between Aquagold International and Putnam Multi

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

By analyzing existing cross correlation between Aquagold International and Putnam Multi Cap Value, you can compare the effects of market volatilities on Aquagold International and Putnam Multi 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 Aquagold International with a short position of Putnam Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Putnam Multi.

Diversification Opportunities for Aquagold International and Putnam Multi

0.74

Correlation Coefficient

Aquagold International  Putnam Multi

Poor diversification

The 3 months correlation between Aquagold and Putnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Putnam Multi Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Multi Cap and Aquagold International 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 Aquagold International are associated (or correlated) with Putnam Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Multi Cap has no effect on the direction of Aquagold International i.e., Aquagold International and Putnam Multi go up and down completely randomly.

Pair Corralation between Aquagold International and Putnam Multi

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Putnam Multi. In addition to that, Aquagold International is 6.61 times more volatile than Putnam Multi Cap Value. It trades about -0.13 of its total potential returns per unit of risk. Putnam Multi Cap Value is currently generating about -0.04 per unit of volatility. If you would invest  2,241  in Putnam Multi Cap Value on October 24, 2024 and sell it today you would lose (116.00) from holding Putnam Multi Cap Value or give up 5.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

Aquagold International  vs.  Putnam Multi Cap Value

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Putnam Multi Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aquagold International and Putnam Multi

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

The idea behind Aquagold International and Putnam Multi Cap Value 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.