Correlation Between Putnam Global and Neuberger Berman

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

Diversification Opportunities for Putnam Global and Neuberger Berman

0.83

Correlation Coefficient

Putnam Global  Neuberger Berman

Very poor diversification

The 3 months correlation between Putnam and Neuberger is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Neuberger Berman Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Large 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 Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Large has no effect on the direction of Putnam Global i.e., Putnam Global and Neuberger Berman go up and down completely randomly.

Pair Corralation between Putnam Global and Neuberger Berman

Assuming the 90 days horizon Putnam Global is expected to generate 1.99 times less return on investment than Neuberger Berman. But when comparing it to its historical volatility, Putnam Global Financials is 1.48 times less risky than Neuberger Berman. It trades about 0.05 of its potential returns per unit of risk. Neuberger Berman Large is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,502  in Neuberger Berman Large on December 22, 2024 and sell it today you would earn a total of  130.00  from holding Neuberger Berman Large or generate 2.89% return on investment over 90 days.

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

Putnam Global Financials  vs.  Neuberger Berman Large

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.

Neuberger Berman Large

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Large are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Neuberger Berman 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 Neuberger Berman

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

The idea behind Putnam Global Financials and Neuberger Berman Large 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.