Correlation Between Ab Select and Putnam Global

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

By analyzing existing cross correlation between Ab Select Longshort and Putnam Global Incm, you can compare the effects of market volatilities on Ab Select and Putnam Global 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 Ab Select with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Putnam Global.

Diversification Opportunities for Ab Select and Putnam Global

0.71

Correlation Coefficient

Ab Select  Putnam Global

Poor diversification

The 3 months correlation between ASCLX and Putnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Longshort and Putnam Global Incm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Incm and Ab Select 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 Ab Select Longshort are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Incm has no effect on the direction of Ab Select i.e., Ab Select and Putnam Global go up and down completely randomly.

Pair Corralation between Ab Select and Putnam Global

Assuming the 90 days horizon Ab Select Longshort is expected to under-perform the Putnam Global. In addition to that, Ab Select is 4.28 times more volatile than Putnam Global Incm. It trades about -0.12 of its total potential returns per unit of risk. Putnam Global Incm is currently generating about -0.01 per unit of volatility. If you would invest  994.00  in Putnam Global Incm on December 1, 2024 and sell it today you would lose (2.00) from holding Putnam Global Incm or give up 0.2% of portfolio value over 90 days.

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

Ab Select Longshort  vs.  Putnam Global Incm

Ab Select Longshort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Select Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Putnam Global Incm

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ab Select and Putnam Global

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

The idea behind Ab Select Longshort and Putnam Global Incm 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.