Correlation Between Putnam Focused and GraniteShares ETF

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

By analyzing existing cross correlation between Putnam Focused Large and GraniteShares ETF Trust, you can compare the effects of market volatilities on Putnam Focused and GraniteShares ETF 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 Focused with a short position of GraniteShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Focused and GraniteShares ETF.

Diversification Opportunities for Putnam Focused and GraniteShares ETF

0.81

Correlation Coefficient

Putnam Focused  GraniteShares ETF

Very poor diversification

The 3 months correlation between Putnam and GraniteShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and GraniteShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares ETF Trust and Putnam Focused 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 Focused Large are associated (or correlated) with GraniteShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares ETF Trust has no effect on the direction of Putnam Focused i.e., Putnam Focused and GraniteShares ETF go up and down completely randomly.

Pair Corralation between Putnam Focused and GraniteShares ETF

Given the investment horizon of 90 days Putnam Focused is expected to generate 10.86 times less return on investment than GraniteShares ETF. But when comparing it to its historical volatility, Putnam Focused Large is 1.78 times less risky than GraniteShares ETF. It trades about 0.02 of its potential returns per unit of risk. GraniteShares ETF Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,196  in GraniteShares ETF Trust on October 4, 2024 and sell it today you would earn a total of  181.00  from holding GraniteShares ETF Trust or generate 5.66% return on investment over 90 days.

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

Putnam Focused Large  vs.  GraniteShares ETF Trust

Putnam Focused Large

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Focused Large are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Putnam Focused may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GraniteShares ETF Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, GraniteShares ETF sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putnam Focused and GraniteShares ETF

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

The idea behind Putnam Focused Large and GraniteShares ETF Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.