Correlation Between Citigroup and Putnam Focused

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

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

Diversification Opportunities for Citigroup and Putnam Focused

-0.16

Correlation Coefficient

Citigroup  Putnam Focused

Good diversification

The 3 months correlation between Citigroup and Putnam is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Putnam Focused Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Equity and Citigroup 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 Citigroup 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 Equity has no effect on the direction of Citigroup i.e., Citigroup and Putnam Focused go up and down completely randomly.

Pair Corralation between Citigroup and Putnam Focused

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Putnam Focused. In addition to that, Citigroup is 2.17 times more volatile than Putnam Focused Equity. It trades about -0.08 of its total potential returns per unit of risk. Putnam Focused Equity is currently generating about -0.02 per unit of volatility. If you would invest  3,596  in Putnam Focused Equity on December 4, 2024 and sell it today you would lose (15.00) from holding Putnam Focused Equity or give up 0.42% of portfolio value over 90 days.

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

Citigroup  vs.  Putnam Focused Equity

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Putnam Focused Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Focused Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Citigroup and Putnam Focused

The main advantage of trading using opposite Citigroup and Putnam Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup and Putnam Focused Equity 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.