Correlation Between Putnam Focused and REX AI

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

Diversification Opportunities for Putnam Focused and REX AI

0.96

Correlation Coefficient

Putnam Focused  REX AI

Almost no diversification

The 3 months correlation between Putnam and REX is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and REX AI Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX AI Equity 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 REX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX AI Equity has no effect on the direction of Putnam Focused i.e., Putnam Focused and REX AI go up and down completely randomly.

Pair Corralation between Putnam Focused and REX AI

Given the investment horizon of 90 days Putnam Focused is expected to generate 1.04 times less return on investment than REX AI. In addition to that, Putnam Focused is 1.05 times more volatile than REX AI Equity. It trades about 0.14 of its total potential returns per unit of risk. REX AI Equity is currently generating about 0.15 per unit of volatility. If you would invest  4,646  in REX AI Equity on September 22, 2024 and sell it today you would earn a total of  447.00  from holding REX AI Equity or generate 9.62% return on investment over 90 days.

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

Putnam Focused Large  vs.  REX AI Equity

Putnam Focused Large

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Focused Large are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Putnam Focused may actually be approaching a critical reversion point that can send shares even higher in January 2025.

REX AI Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Putnam Focused and REX AI

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

The idea behind Putnam Focused Large and REX AI Equity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.