Correlation Between Putnam Global and Usaa Intermediate

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

Diversification Opportunities for Putnam Global and Usaa Intermediate

0.41

Correlation Coefficient

Putnam Global  Usaa Intermediate

Very weak diversification

The 3 months correlation between Putnam and Usaa is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Usaa Intermediate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usaa Intermediate Term 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 Usaa Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usaa Intermediate Term has no effect on the direction of Putnam Global i.e., Putnam Global and Usaa Intermediate go up and down completely randomly.

Pair Corralation between Putnam Global and Usaa Intermediate

Assuming the 90 days horizon Putnam Global is expected to generate 1.53 times less return on investment than Usaa Intermediate. In addition to that, Putnam Global is 1.65 times more volatile than Usaa Intermediate Term. It trades about 0.05 of its total potential returns per unit of risk. Usaa Intermediate Term is currently generating about 0.13 per unit of volatility. If you would invest  898.00  in Usaa Intermediate Term on December 19, 2024 and sell it today you would earn a total of  21.00  from holding Usaa Intermediate Term or generate 2.34% return on investment over 90 days.

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

Putnam Global Financials  vs.  Usaa Intermediate Term

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.

Usaa Intermediate Term

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Usaa Intermediate Term are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Usaa Intermediate 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 Usaa Intermediate

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

The idea behind Putnam Global Financials and Usaa Intermediate Term 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.