Correlation Between Volatility Shares and Putnam Sustainable

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

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

Diversification Opportunities for Volatility Shares and Putnam Sustainable

0.61

Correlation Coefficient

Volatility Shares  Putnam Sustainable

Poor diversification

The 3 months correlation between Volatility and Putnam is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and Putnam Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Sustainable Future and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with Putnam Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Sustainable Future has no effect on the direction of Volatility Shares i.e., Volatility Shares and Putnam Sustainable go up and down completely randomly.

Pair Corralation between Volatility Shares and Putnam Sustainable

Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 6.57 times more return on investment than Putnam Sustainable. However, Volatility Shares is 6.57 times more volatile than Putnam Sustainable Future. It trades about 0.09 of its potential returns per unit of risk. Putnam Sustainable Future is currently generating about 0.08 per unit of risk. If you would invest  1,334  in Volatility Shares Trust on October 7, 2024 and sell it today you would earn a total of  4,435  from holding Volatility Shares Trust or generate 332.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.62%
Values	Daily Returns

Volatility Shares Trust  vs.  Putnam Sustainable Future

Volatility Shares Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volatility Shares Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Volatility Shares showed solid returns over the last few months and may actually be approaching a breakup point.

Putnam Sustainable Future

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Sustainable Future are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Putnam Sustainable is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Volatility Shares and Putnam Sustainable

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

The idea behind Volatility Shares Trust and Putnam Sustainable Future 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.