Correlation Between ProShares Trust and Putnam Focused

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

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

Diversification Opportunities for ProShares Trust and Putnam Focused

-0.59

Correlation Coefficient

ProShares Trust  Putnam Focused

Excellent diversification

The 3 months correlation between ProShares and Putnam is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Putnam Focused Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Large and ProShares Trust 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 ProShares Trust are associated (or correlated) with Putnam Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Focused Large has no effect on the direction of ProShares Trust i.e., ProShares Trust and Putnam Focused go up and down completely randomly.

Pair Corralation between ProShares Trust and Putnam Focused

Given the investment horizon of 90 days ProShares Trust is expected to generate 4.9 times more return on investment than Putnam Focused. However, ProShares Trust is 4.9 times more volatile than Putnam Focused Large. It trades about 0.04 of its potential returns per unit of risk. Putnam Focused Large is currently generating about -0.4 per unit of risk. If you would invest  2,291  in ProShares Trust on September 23, 2024 and sell it today you would earn a total of  39.00  from holding ProShares Trust or generate 1.7% return on investment over 90 days.

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

ProShares Trust   vs.  Putnam Focused Large

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Putnam Focused Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Focused Large has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Putnam Focused is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ProShares Trust and Putnam Focused

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

The idea behind ProShares Trust and Putnam Focused Large 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.