Correlation Between Vanguard Intermediate and Putnam ETF

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

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

Diversification Opportunities for Vanguard Intermediate and Putnam ETF

0.99

Correlation Coefficient

Vanguard Intermediate  Putnam ETF

No risk reduction

The 3 months correlation between Vanguard and Putnam is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Intermediate Term Bon and Putnam ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam ETF Trust and Vanguard Intermediate 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 Vanguard Intermediate Term Bond are associated (or correlated) with Putnam ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam ETF Trust has no effect on the direction of Vanguard Intermediate i.e., Vanguard Intermediate and Putnam ETF go up and down completely randomly.

Pair Corralation between Vanguard Intermediate and Putnam ETF

Considering the 90-day investment horizon Vanguard Intermediate Term Bond is expected to generate 1.05 times more return on investment than Putnam ETF. However, Vanguard Intermediate is 1.05 times more volatile than Putnam ETF Trust. It trades about 0.15 of its potential returns per unit of risk. Putnam ETF Trust is currently generating about 0.12 per unit of risk. If you would invest  7,435  in Vanguard Intermediate Term Bond on December 29, 2024 and sell it today you would earn a total of  206.00  from holding Vanguard Intermediate Term Bond or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Vanguard Intermediate Term Bon  vs.  Putnam ETF Trust

Vanguard Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Bond are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Putnam ETF Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam ETF Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Putnam ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Intermediate and Putnam ETF

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

The idea behind Vanguard Intermediate Term Bond and Putnam ETF Trust 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.