Correlation Between BlackRock Energy and Putnam Master

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

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

Diversification Opportunities for BlackRock Energy and Putnam Master

0.43

Correlation Coefficient

BlackRock Energy  Putnam Master

Very weak diversification

The 3 months correlation between BlackRock and Putnam is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Energy and and Putnam Master Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Master Interm and BlackRock Energy 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 BlackRock Energy and are associated (or correlated) with Putnam Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Master Interm has no effect on the direction of BlackRock Energy i.e., BlackRock Energy and Putnam Master go up and down completely randomly.

Pair Corralation between BlackRock Energy and Putnam Master

Considering the 90-day investment horizon BlackRock Energy is expected to generate 2.79 times less return on investment than Putnam Master. In addition to that, BlackRock Energy is 1.59 times more volatile than Putnam Master Intermediate. It trades about 0.01 of its total potential returns per unit of risk. Putnam Master Intermediate is currently generating about 0.06 per unit of volatility. If you would invest  324.00  in Putnam Master Intermediate on December 4, 2024 and sell it today you would earn a total of  7.00  from holding Putnam Master Intermediate or generate 2.16% return on investment over 90 days.

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

BlackRock Energy and  vs.  Putnam Master Intermediate

BlackRock Energy

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, BlackRock Energy is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Putnam Master Interm

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Master Intermediate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Putnam Master is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock Energy and Putnam Master

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

The idea behind BlackRock Energy and and Putnam Master Intermediate 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.