Correlation Between Putnam Global and Sterling Capital

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

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

Diversification Opportunities for Putnam Global and Sterling Capital

0.67

Correlation Coefficient

Putnam Global  Sterling Capital

Poor diversification

The 3 months correlation between Putnam and Sterling is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Sterling Capital Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Int and Putnam Global 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 Global Financials are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Int has no effect on the direction of Putnam Global i.e., Putnam Global and Sterling Capital go up and down completely randomly.

Pair Corralation between Putnam Global and Sterling Capital

Assuming the 90 days horizon Putnam Global Financials is expected to under-perform the Sterling Capital. In addition to that, Putnam Global is 2.14 times more volatile than Sterling Capital Intermediate. It trades about -0.09 of its total potential returns per unit of risk. Sterling Capital Intermediate is currently generating about -0.13 per unit of volatility. If you would invest  871.00  in Sterling Capital Intermediate on October 10, 2024 and sell it today you would lose (16.00) from holding Sterling Capital Intermediate or give up 1.84% of portfolio value over 90 days.

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

Putnam Global Financials  vs.  Sterling Capital Intermediate

Putnam Global Financials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sterling Capital Int

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Putnam Global Financials and Sterling Capital Intermediate 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.