Correlation Between Ivy Natural and Putnam Global

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

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

Diversification Opportunities for Ivy Natural and Putnam Global

0.63

Correlation Coefficient

Ivy Natural  Putnam Global

Poor diversification

The 3 months correlation between Ivy and Putnam is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ivy Natural Resources 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 Ivy Natural 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 Ivy Natural Resources 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 Ivy Natural i.e., Ivy Natural and Putnam Global go up and down completely randomly.

Pair Corralation between Ivy Natural and Putnam Global

Assuming the 90 days horizon Ivy Natural Resources is expected to generate 1.78 times more return on investment than Putnam Global. However, Ivy Natural is 1.78 times more volatile than Putnam Global Financials. It trades about 0.01 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  1,254  in Ivy Natural Resources on October 26, 2024 and sell it today you would earn a total of  7.00  from holding Ivy Natural Resources or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Ivy Natural Resources  vs.  Putnam Global Financials

Ivy Natural Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Natural Resources are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ivy Natural 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 Ivy Natural and Putnam Global

The main advantage of trading using opposite Ivy Natural and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy Natural 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 Ivy Natural Resources 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.