Correlation Between BlackRock Core and Putnam Master

Can any of the company-specific risk be diversified away by investing in both BlackRock Core 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 Core 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 Core Bond and Putnam Master Intermediate, you can compare the effects of market volatilities on BlackRock Core 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 Core with a short position of Putnam Master. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Core and Putnam Master.

Diversification Opportunities for BlackRock Core and Putnam Master

0.79

Correlation Coefficient

BlackRock Core  Putnam Master

Poor diversification

The 3 months correlation between BlackRock and Putnam is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Core Bond 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 Core 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 Core Bond 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 Core i.e., BlackRock Core and Putnam Master go up and down completely randomly.

Pair Corralation between BlackRock Core and Putnam Master

Considering the 90-day investment horizon BlackRock Core Bond is expected to generate 1.26 times more return on investment than Putnam Master. However, BlackRock Core is 1.26 times more volatile than Putnam Master Intermediate. It trades about 0.12 of its potential returns per unit of risk. Putnam Master Intermediate is currently generating about 0.14 per unit of risk. If you would invest  1,017  in BlackRock Core Bond on December 28, 2024 and sell it today you would earn a total of  49.00  from holding BlackRock Core Bond or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

BlackRock Core Bond  vs.  Putnam Master Intermediate

BlackRock Core Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Core Bond are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, BlackRock Core is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Putnam Master Interm

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Master Intermediate are ranked lower than 10 (%) 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 Core and Putnam Master

The main advantage of trading using opposite BlackRock Core and Putnam Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Core 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 Core Bond 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.