Correlation Between Dana Large and Putnam Global

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

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

Diversification Opportunities for Dana Large and Putnam Global

0.74

Correlation Coefficient

Dana Large  Putnam Global

Poor diversification

The 3 months correlation between Dana and Putnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Putnam Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Technology and Dana Large 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 Dana Large Cap 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 Technology has no effect on the direction of Dana Large i.e., Dana Large and Putnam Global go up and down completely randomly.

Pair Corralation between Dana Large and Putnam Global

Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Putnam Global. In addition to that, Dana Large is 2.61 times more volatile than Putnam Global Technology. It trades about -0.24 of its total potential returns per unit of risk. Putnam Global Technology is currently generating about -0.32 per unit of volatility. If you would invest  6,536  in Putnam Global Technology on October 4, 2024 and sell it today you would lose (722.00) from holding Putnam Global Technology or give up 11.05% of portfolio value over 90 days.

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

Dana Large Cap  vs.  Putnam Global Technology

Dana Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Putnam Global Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Dana Large and Putnam Global

The main advantage of trading using opposite Dana Large and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large 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 Dana Large Cap and Putnam Global Technology 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.