Correlation Between Qs Us and Putnam Global

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

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

Diversification Opportunities for Qs Us and Putnam Global

0.94

Correlation Coefficient

Qs Us  Putnam Global

Almost no diversification

The 3 months correlation between LMTIX and Putnam is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Qs Large Cap 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 Qs Us 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 Qs Large Cap 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 Qs Us i.e., Qs Us and Putnam Global go up and down completely randomly.

Pair Corralation between Qs Us and Putnam Global

Assuming the 90 days horizon Qs Large Cap is expected to under-perform the Putnam Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Qs Large Cap is 1.04 times less risky than Putnam Global. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Putnam Global Industrials is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,314  in Putnam Global Industrials on December 20, 2024 and sell it today you would lose (156.00) from holding Putnam Global Industrials or give up 4.71% of portfolio value over 90 days.

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

Qs Large Cap  vs.  Putnam Global Industrials

Qs Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qs Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Industrials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Global Industrials has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Qs Us and Putnam Global

The main advantage of trading using opposite Qs Us and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Us 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 Qs Large Cap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.