Correlation Between Locorr Market and George Putnam

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

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

Diversification Opportunities for Locorr Market and George Putnam

-0.12

Correlation Coefficient

Locorr Market  George Putnam

Good diversification

The 3 months correlation between Locorr and George is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Market Trend and George Putnam Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Putnam and Locorr Market 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 Locorr Market Trend are associated (or correlated) with George Putnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Putnam has no effect on the direction of Locorr Market i.e., Locorr Market and George Putnam go up and down completely randomly.

Pair Corralation between Locorr Market and George Putnam

Assuming the 90 days horizon Locorr Market Trend is expected to generate 1.03 times more return on investment than George Putnam. However, Locorr Market is 1.03 times more volatile than George Putnam Fund. It trades about -0.02 of its potential returns per unit of risk. George Putnam Fund is currently generating about -0.08 per unit of risk. If you would invest  1,034  in Locorr Market Trend on December 4, 2024 and sell it today you would lose (10.00) from holding Locorr Market Trend or give up 0.97% of portfolio value over 90 days.

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

Locorr Market Trend  vs.  George Putnam Fund

Locorr Market Trend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Locorr Market Trend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Locorr Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

George Putnam

Risk-Adjusted Performance

Very Weak

Over the last 90 days George Putnam Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, George Putnam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Locorr Market and George Putnam

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

The idea behind Locorr Market Trend and George Putnam Fund 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.