Correlation Between Putnam Global and Putnam Vertible

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

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

Diversification Opportunities for Putnam Global and Putnam Vertible

-0.35

Correlation Coefficient

Putnam Global  Putnam Vertible

Very good diversification

The 3 months correlation between Putnam and Putnam is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Equity and Putnam Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Vertible Secu 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 Equity are associated (or correlated) with Putnam Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Vertible Secu has no effect on the direction of Putnam Global i.e., Putnam Global and Putnam Vertible go up and down completely randomly.

Pair Corralation between Putnam Global and Putnam Vertible

Assuming the 90 days horizon Putnam Global Equity is expected to under-perform the Putnam Vertible. In addition to that, Putnam Global is 1.24 times more volatile than Putnam Vertible Securities. It trades about -0.18 of its total potential returns per unit of risk. Putnam Vertible Securities is currently generating about 0.05 per unit of volatility. If you would invest  2,508  in Putnam Vertible Securities on October 6, 2024 and sell it today you would earn a total of  47.00  from holding Putnam Vertible Securities or generate 1.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Putnam Global Equity  vs.  Putnam Vertible Securities

Putnam Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Global Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Putnam Vertible Secu

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Vertible Securities are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Putnam Vertible 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 Vertible

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

The idea behind Putnam Global Equity and Putnam Vertible Securities 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.