Correlation Between Putnam Global and Putnam Global

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

Diversification Opportunities for Putnam Global and Putnam Global

0.55

Correlation Coefficient

Putnam Global  Putnam Global

Very weak diversification

The 3 months correlation between Putnam and Putnam is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Industrials and Putnam Global Incm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Incm 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 Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Incm has no effect on the direction of Putnam Global i.e., Putnam Global and Putnam Global go up and down completely randomly.

Pair Corralation between Putnam Global and Putnam Global

Assuming the 90 days horizon Putnam Global Industrials is expected to under-perform the Putnam Global. In addition to that, Putnam Global is 6.21 times more volatile than Putnam Global Incm. It trades about -0.11 of its total potential returns per unit of risk. Putnam Global Incm is currently generating about -0.01 per unit of volatility. If you would invest  994.00  in Putnam Global Incm on December 1, 2024 and sell it today you would lose (2.00) from holding Putnam Global Incm or give up 0.2% of portfolio value over 90 days.

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

Putnam Global Industrials  vs.  Putnam Global Incm

Putnam Global Industrials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Global Industrials 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.

Putnam Global Incm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Global Incm has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Putnam Global 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 Putnam Global

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

The idea behind Putnam Global Industrials and Putnam Global Incm 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.