Correlation Between Putnam Global and Ivy International

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

Diversification Opportunities for Putnam Global and Ivy International

0.64

Correlation Coefficient

Putnam Global  Ivy International

Poor diversification

The 3 months correlation between Putnam and Ivy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Ivy International E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy International 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 Ivy International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy International has no effect on the direction of Putnam Global i.e., Putnam Global and Ivy International go up and down completely randomly.

Pair Corralation between Putnam Global and Ivy International

Assuming the 90 days horizon Putnam Global is expected to generate 7.05 times less return on investment than Ivy International. But when comparing it to its historical volatility, Putnam Global Financials is 1.98 times less risky than Ivy International. It trades about 0.05 of its potential returns per unit of risk. Ivy International E is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,781  in Ivy International E on December 19, 2024 and sell it today you would earn a total of  196.00  from holding Ivy International E or generate 11.01% return on investment over 90 days.

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

Putnam Global Financials  vs.  Ivy International E

Putnam Global Financials

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Financials are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Ivy International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy International E are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ivy International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Putnam Global and Ivy International

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

The idea behind Putnam Global Financials and Ivy International E 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.