Correlation Between Procter Gamble and Putnam Sustainable
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Putnam Sustainable 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 Procter Gamble and Putnam Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Putnam Sustainable Future, you can compare the effects of market volatilities on Procter Gamble and Putnam Sustainable 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 Procter Gamble with a short position of Putnam Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Putnam Sustainable.
Diversification Opportunities for Procter Gamble and Putnam Sustainable
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Procter and Putnam is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Putnam Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Sustainable Future and Procter Gamble 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 Procter Gamble are associated (or correlated) with Putnam Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Sustainable Future has no effect on the direction of Procter Gamble i.e., Procter Gamble and Putnam Sustainable go up and down completely randomly.
Pair Corralation between Procter Gamble and Putnam Sustainable
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 2.31 times less return on investment than Putnam Sustainable. But when comparing it to its historical volatility, Procter Gamble is 1.08 times less risky than Putnam Sustainable. It trades about 0.04 of its potential returns per unit of risk. Putnam Sustainable Future is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,773 in Putnam Sustainable Future on October 7, 2024 and sell it today you would earn a total of 755.00 from holding Putnam Sustainable Future or generate 42.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Procter Gamble vs. Putnam Sustainable Future
Performance |
Timeline |
Procter Gamble |
Putnam Sustainable Future |
Procter Gamble and Putnam Sustainable Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Procter Gamble and Putnam Sustainable
The main advantage of trading using opposite Procter Gamble and Putnam Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Putnam Sustainable 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 Sustainable will offset losses from the drop in Putnam Sustainable's long position.Procter Gamble vs. Aquagold International | Procter Gamble vs. Alibaba Group Holding | Procter Gamble vs. Banco Bradesco SA | Procter Gamble vs. HP Inc |
Putnam Sustainable vs. Putnam Sustainable Leaders | Putnam Sustainable vs. Putnam Focused Large | Putnam Sustainable vs. FlexShares STOXX Global | Putnam Sustainable vs. Putnam Focused Large |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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