Correlation Between Barings Emerging and George Putnam

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

By analyzing existing cross correlation between Barings Emerging Markets and George Putnam Fund, you can compare the effects of market volatilities on Barings Emerging and George Putnam 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 Barings Emerging with a short position of George Putnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and George Putnam.

Diversification Opportunities for Barings Emerging and George Putnam

0.23

Correlation Coefficient

Barings Emerging  George Putnam

Modest diversification

The 3 months correlation between Barings and George is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets and George Putnam Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Putnam and Barings Emerging 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 Barings Emerging Markets are associated (or correlated) with George Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Putnam has no effect on the direction of Barings Emerging i.e., Barings Emerging and George Putnam go up and down completely randomly.

Pair Corralation between Barings Emerging and George Putnam

Assuming the 90 days horizon Barings Emerging is expected to generate 1.9 times less return on investment than George Putnam. But when comparing it to its historical volatility, Barings Emerging Markets is 2.83 times less risky than George Putnam. It trades about 0.04 of its potential returns per unit of risk. George Putnam Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,601  in George Putnam Fund on September 5, 2024 and sell it today you would earn a total of  11.00  from holding George Putnam Fund or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Barings Emerging Markets  vs.  George Putnam Fund

Barings Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

George Putnam

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in George Putnam Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, George Putnam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barings Emerging and George Putnam

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

The idea behind Barings Emerging Markets and George Putnam Fund 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.