Correlation Between Putnam Money and Brandes Global

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

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

Diversification Opportunities for Putnam Money and Brandes Global

0.0

Correlation Coefficient

Putnam Money  Brandes Global

Pay attention - limited upside

The 3 months correlation between Putnam and Brandes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Money Market and Brandes Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Global Equity and Putnam Money 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 Putnam Money Market are associated (or correlated) with Brandes Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Global Equity has no effect on the direction of Putnam Money i.e., Putnam Money and Brandes Global go up and down completely randomly.

Pair Corralation between Putnam Money and Brandes Global

Assuming the 90 days horizon Putnam Money is expected to generate 4.29 times less return on investment than Brandes Global. But when comparing it to its historical volatility, Putnam Money Market is 6.16 times less risky than Brandes Global. It trades about 0.12 of its potential returns per unit of risk. Brandes Global Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,522  in Brandes Global Equity on December 3, 2024 and sell it today you would earn a total of  590.00  from holding Brandes Global Equity or generate 23.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

Putnam Money Market  vs.  Brandes Global Equity

Putnam Money Market

Risk-Adjusted Performance

Very Weak

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

Brandes Global Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brandes Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Brandes 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 Putnam Money and Brandes Global

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

The idea behind Putnam Money Market and Brandes Global Equity 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.