Correlation Between Vy Clarion and Putnam Global

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

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

Diversification Opportunities for Vy Clarion and Putnam Global

0.85

Correlation Coefficient

Vy Clarion  Putnam Global

Very poor diversification

The 3 months correlation between IVRSX and Putnam is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vy Clarion Real 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 Vy Clarion 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 Vy Clarion Real 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 Vy Clarion i.e., Vy Clarion and Putnam Global go up and down completely randomly.

Pair Corralation between Vy Clarion and Putnam Global

Assuming the 90 days horizon Vy Clarion Real is expected to under-perform the Putnam Global. In addition to that, Vy Clarion is 1.92 times more volatile than Putnam Global Financials. It trades about -0.17 of its total potential returns per unit of risk. Putnam Global Financials is currently generating about -0.2 per unit of volatility. If you would invest  1,077  in Putnam Global Financials on October 11, 2024 and sell it today you would lose (45.00) from holding Putnam Global Financials or give up 4.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.56%
Values	Daily Returns

Vy Clarion Real  vs.  Putnam Global Financials

Vy Clarion Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vy Clarion Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Putnam Global Financials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Global Financials has generated negative risk-adjusted returns adding no value to fund investors. 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 Vy Clarion and Putnam Global

The main advantage of trading using opposite Vy Clarion and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vy Clarion 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 Vy Clarion Real 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.