Correlation Between Columbia Short and Putnam Global

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

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

Diversification Opportunities for Columbia Short and Putnam Global

-0.05

Correlation Coefficient

Columbia Short  Putnam Global

Good diversification

The 3 months correlation between Columbia and Putnam is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Short Term and Putnam Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Financials and Columbia Short 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 Columbia Short Term are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Financials has no effect on the direction of Columbia Short i.e., Columbia Short and Putnam Global go up and down completely randomly.

Pair Corralation between Columbia Short and Putnam Global

Assuming the 90 days horizon Columbia Short Term is expected to generate 0.16 times more return on investment than Putnam Global. However, Columbia Short Term is 6.44 times less risky than Putnam Global. It trades about 0.21 of its potential returns per unit of risk. Putnam Global Financials is currently generating about 0.02 per unit of risk. If you would invest  1,200  in Columbia Short Term on October 26, 2024 and sell it today you would earn a total of  13.00  from holding Columbia Short Term or generate 1.08% return on investment over 90 days.

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

Columbia Short Term  vs.  Putnam Global Financials

Columbia Short Term

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Short Term are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Global Financials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Financials are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Putnam Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Short and Putnam Global

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

The idea behind Columbia Short Term and Putnam Global Financials 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.