Correlation Between Blackrock Health and Putnam Dynamic

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

By analyzing existing cross correlation between Blackrock Health Sciences and Putnam Dynamic Asset, you can compare the effects of market volatilities on Blackrock Health and Putnam Dynamic 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 Health with a short position of Putnam Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Health and Putnam Dynamic.

Diversification Opportunities for Blackrock Health and Putnam Dynamic

0.13

Correlation Coefficient

Blackrock Health  Putnam Dynamic

Average diversification

The 3 months correlation between Blackrock and Putnam is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Putnam Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Dynamic Asset and Blackrock Health 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 Health Sciences are associated (or correlated) with Putnam Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Dynamic Asset has no effect on the direction of Blackrock Health i.e., Blackrock Health and Putnam Dynamic go up and down completely randomly.

Pair Corralation between Blackrock Health and Putnam Dynamic

Assuming the 90 days horizon Blackrock Health Sciences is expected to under-perform the Putnam Dynamic. In addition to that, Blackrock Health is 2.45 times more volatile than Putnam Dynamic Asset. It trades about -0.14 of its total potential returns per unit of risk. Putnam Dynamic Asset is currently generating about 0.06 per unit of volatility. If you would invest  1,104  in Putnam Dynamic Asset on September 13, 2024 and sell it today you would earn a total of  12.00  from holding Putnam Dynamic Asset or generate 1.09% return on investment over 90 days.

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

Blackrock Health Sciences  vs.  Putnam Dynamic Asset

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam Dynamic Asset

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Dynamic Asset are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Health and Putnam Dynamic

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

The idea behind Blackrock Health Sciences and Putnam Dynamic Asset 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.