Correlation Between BlackRock Health and Putnam Master

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

Diversification Opportunities for BlackRock Health and Putnam Master

0.68

Correlation Coefficient

BlackRock Health  Putnam Master

Poor diversification

The 3 months correlation between BlackRock and Putnam is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Health Sciences 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 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 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 Health i.e., BlackRock Health and Putnam Master go up and down completely randomly.

Pair Corralation between BlackRock Health and Putnam Master

Considering the 90-day investment horizon BlackRock Health Sciences is expected to generate 1.31 times more return on investment than Putnam Master. However, BlackRock Health is 1.31 times more volatile than Putnam Master Intermediate. It trades about 0.11 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  3,702  in BlackRock Health Sciences on December 28, 2024 and sell it today you would earn a total of  168.00  from holding BlackRock Health Sciences or generate 4.54% return on investment over 90 days.

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

BlackRock Health Sciences  vs.  Putnam Master Intermediate

BlackRock Health Sciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Health Sciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, BlackRock Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Health and Putnam Master

The main advantage of trading using opposite BlackRock Health and Putnam Master positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Health 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 Health Sciences 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.