Correlation Between First Eagle and Putnam Global

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

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

Diversification Opportunities for First Eagle and Putnam Global

0.71

Correlation Coefficient

First Eagle  Putnam Global

Poor diversification

The 3 months correlation between First and Putnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Putnam Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Health and First Eagle 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 First Eagle Gold 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 Health has no effect on the direction of First Eagle i.e., First Eagle and Putnam Global go up and down completely randomly.

Pair Corralation between First Eagle and Putnam Global

Assuming the 90 days horizon First Eagle Gold is expected to generate 1.62 times more return on investment than Putnam Global. However, First Eagle is 1.62 times more volatile than Putnam Global Health. It trades about 0.31 of its potential returns per unit of risk. Putnam Global Health is currently generating about 0.07 per unit of risk. If you would invest  2,302  in First Eagle Gold on December 20, 2024 and sell it today you would earn a total of  645.00  from holding First Eagle Gold or generate 28.02% return on investment over 90 days.

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

First Eagle Gold  vs.  Putnam Global Health

First Eagle Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Eagle showed solid returns over the last few months and may actually be approaching a breakup point.

Putnam Global Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Health are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 First Eagle and Putnam Global

The main advantage of trading using opposite First Eagle and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle 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 First Eagle Gold and Putnam Global Health 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.