Correlation Between Alliancebernstein and Putnam Global

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

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

Diversification Opportunities for Alliancebernstein and Putnam Global

0.25

Correlation Coefficient

Alliancebernstein  Putnam Global

Modest diversification

The 3 months correlation between Alliancebernstein and Putnam is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alliancebernstein Global High and Putnam Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Technology and Alliancebernstein 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 Alliancebernstein Global High 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 Technology has no effect on the direction of Alliancebernstein i.e., Alliancebernstein and Putnam Global go up and down completely randomly.

Pair Corralation between Alliancebernstein and Putnam Global

Considering the 90-day investment horizon Alliancebernstein is expected to generate 1.6 times less return on investment than Putnam Global. But when comparing it to its historical volatility, Alliancebernstein Global High is 2.29 times less risky than Putnam Global. It trades about 0.1 of its potential returns per unit of risk. Putnam Global Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,951  in Putnam Global Technology on October 4, 2024 and sell it today you would earn a total of  1,604  from holding Putnam Global Technology or generate 32.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.7%
Values	Daily Returns

Alliancebernstein Global High  vs.  Putnam Global Technology

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein Global High has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Alliancebernstein is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Putnam Global Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alliancebernstein and Putnam Global

The main advantage of trading using opposite Alliancebernstein and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliancebernstein 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 Alliancebernstein Global High and Putnam Global Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.