Correlation Between Intel and Putnam Equity

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

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

Diversification Opportunities for Intel and Putnam Equity

0.86

Correlation Coefficient

Intel  Putnam Equity

Very poor diversification

The 3 months correlation between Intel and Putnam is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity Income and Intel 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 Intel are associated (or correlated) with Putnam Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Intel i.e., Intel and Putnam Equity go up and down completely randomly.

Pair Corralation between Intel and Putnam Equity

Given the investment horizon of 90 days Intel is expected to generate 4.39 times more return on investment than Putnam Equity. However, Intel is 4.39 times more volatile than Putnam Equity Income. It trades about 0.11 of its potential returns per unit of risk. Putnam Equity Income is currently generating about 0.16 per unit of risk. If you would invest  2,010  in Intel on August 31, 2024 and sell it today you would earn a total of  355.00  from holding Intel or generate 17.66% return on investment over 90 days.

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

Intel  vs.  Putnam Equity Income

Intel

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Putnam Equity Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Equity Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intel and Putnam Equity

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

The idea behind Intel and Putnam Equity Income 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.