Correlation Between Putnam Sustainable and Global X

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

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

Diversification Opportunities for Putnam Sustainable and Global X

0.66

Correlation Coefficient

Putnam Sustainable  Global X

Poor diversification

The 3 months correlation between Putnam and Global is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Sustainable Future and Global X Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Cloud and Putnam Sustainable 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 Sustainable Future are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Cloud has no effect on the direction of Putnam Sustainable i.e., Putnam Sustainable and Global X go up and down completely randomly.

Pair Corralation between Putnam Sustainable and Global X

Given the investment horizon of 90 days Putnam Sustainable Future is expected to generate 0.78 times more return on investment than Global X. However, Putnam Sustainable Future is 1.28 times less risky than Global X. It trades about -0.22 of its potential returns per unit of risk. Global X Cloud is currently generating about -0.19 per unit of risk. If you would invest  2,657  in Putnam Sustainable Future on October 10, 2024 and sell it today you would lose (134.00) from holding Putnam Sustainable Future or give up 5.04% of portfolio value over 90 days.

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

Putnam Sustainable Future  vs.  Global X Cloud

Putnam Sustainable Future

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Sustainable Future are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Putnam Sustainable is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X Cloud

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cloud are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putnam Sustainable and Global X

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

The idea behind Putnam Sustainable Future and Global X Cloud 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.