Correlation Between Putnam Global and Leland Thomson

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

By analyzing existing cross correlation between Putnam Global Industrials and Leland Thomson Reuters, you can compare the effects of market volatilities on Putnam Global and Leland Thomson 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 Leland Thomson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Leland Thomson.

Diversification Opportunities for Putnam Global and Leland Thomson

0.95

Correlation Coefficient

Putnam Global  Leland Thomson

Almost no diversification

The 3 months correlation between Putnam and Leland is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Industrials and Leland Thomson Reuters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leland Thomson Reuters 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 Industrials are associated (or correlated) with Leland Thomson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leland Thomson Reuters has no effect on the direction of Putnam Global i.e., Putnam Global and Leland Thomson go up and down completely randomly.

Pair Corralation between Putnam Global and Leland Thomson

Assuming the 90 days horizon Putnam Global is expected to generate 1.39 times less return on investment than Leland Thomson. But when comparing it to its historical volatility, Putnam Global Industrials is 1.87 times less risky than Leland Thomson. It trades about 0.09 of its potential returns per unit of risk. Leland Thomson Reuters is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,083  in Leland Thomson Reuters on September 29, 2024 and sell it today you would earn a total of  266.00  from holding Leland Thomson Reuters or generate 12.77% return on investment over 90 days.

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

Putnam Global Industrials  vs.  Leland Thomson Reuters

Putnam Global Industrials

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Industrials are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leland Thomson Reuters

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leland Thomson Reuters are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Leland Thomson may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Putnam Global and Leland Thomson

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

The idea behind Putnam Global Industrials and Leland Thomson Reuters 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.