Correlation Between Putnam Global and Blackrock Aggressive

Can any of the company-specific risk be diversified away by investing in both Putnam Global and Blackrock Aggressive 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 Blackrock Aggressive 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 Blackrock Aggressive Gwthprprdptfinvstrr, you can compare the effects of market volatilities on Putnam Global and Blackrock Aggressive 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 Blackrock Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Blackrock Aggressive.

Diversification Opportunities for Putnam Global and Blackrock Aggressive

0.89

Correlation Coefficient

Putnam Global  Blackrock Aggressive

Very poor diversification

The 3 months correlation between Putnam and Blackrock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Blackrock Aggressive Gwthprprd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Aggressive 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 Blackrock Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Aggressive has no effect on the direction of Putnam Global i.e., Putnam Global and Blackrock Aggressive go up and down completely randomly.

Pair Corralation between Putnam Global and Blackrock Aggressive

Assuming the 90 days horizon Putnam Global Financials is expected to generate 0.41 times more return on investment than Blackrock Aggressive. However, Putnam Global Financials is 2.46 times less risky than Blackrock Aggressive. It trades about -0.18 of its potential returns per unit of risk. Blackrock Aggressive Gwthprprdptfinvstrr is currently generating about -0.17 per unit of risk. If you would invest  1,076  in Putnam Global Financials on October 9, 2024 and sell it today you would lose (39.00) from holding Putnam Global Financials or give up 3.62% of portfolio value over 90 days.

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

Putnam Global Financials  vs.  Blackrock Aggressive Gwthprprd

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.

Blackrock Aggressive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Aggressive Gwthprprdptfinvstrr has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Putnam Global and Blackrock Aggressive

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

The idea behind Putnam Global Financials and Blackrock Aggressive Gwthprprdptfinvstrr 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.