Correlation Between Goldman Sachs and Putnam Global

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

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

Diversification Opportunities for Goldman Sachs and Putnam Global

0.54

Correlation Coefficient

Goldman Sachs  Putnam Global

Very weak diversification

The 3 months correlation between GOLDMAN and Putnam is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs High and Putnam Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Industrials and Goldman Sachs 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 Goldman Sachs High 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 Industrials has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Putnam Global go up and down completely randomly.

Pair Corralation between Goldman Sachs and Putnam Global

Assuming the 90 days horizon Goldman Sachs is expected to generate 2.93 times less return on investment than Putnam Global. But when comparing it to its historical volatility, Goldman Sachs High is 2.88 times less risky than Putnam Global. It trades about 0.11 of its potential returns per unit of risk. Putnam Global Industrials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,485  in Putnam Global Industrials on September 4, 2024 and sell it today you would earn a total of  1,463  from holding Putnam Global Industrials or generate 58.87% return on investment over 90 days.

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

Goldman Sachs High  vs.  Putnam Global Industrials

Goldman Sachs High

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs High are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Global Industrials

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Industrials are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Putnam Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goldman Sachs and Putnam Global

The main advantage of trading using opposite Goldman Sachs and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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 Goldman Sachs High and Putnam Global Industrials 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.