Correlation Between IShares Core and Putnam Sustainable

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

By analyzing existing cross correlation between iShares Core SP and Putnam Sustainable Leaders, you can compare the effects of market volatilities on IShares Core and Putnam Sustainable 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 IShares Core with a short position of Putnam Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Putnam Sustainable.

Diversification Opportunities for IShares Core and Putnam Sustainable

0.95

Correlation Coefficient

IShares Core  Putnam Sustainable

Almost no diversification

The 3 months correlation between IShares and Putnam is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Putnam Sustainable Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Sustainable and IShares Core 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 iShares Core SP are associated (or correlated) with Putnam Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Sustainable has no effect on the direction of IShares Core i.e., IShares Core and Putnam Sustainable go up and down completely randomly.

Pair Corralation between IShares Core and Putnam Sustainable

Given the investment horizon of 90 days iShares Core SP is expected to generate 1.24 times more return on investment than Putnam Sustainable. However, IShares Core is 1.24 times more volatile than Putnam Sustainable Leaders. It trades about -0.08 of its potential returns per unit of risk. Putnam Sustainable Leaders is currently generating about -0.13 per unit of risk. If you would invest  14,030  in iShares Core SP on December 29, 2024 and sell it today you would lose (1,022) from holding iShares Core SP or give up 7.28% of portfolio value over 90 days.

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

iShares Core SP  vs.  Putnam Sustainable Leaders

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Putnam Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Sustainable Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with IShares Core and Putnam Sustainable

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

The idea behind iShares Core SP and Putnam Sustainable Leaders 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.