Correlation Between Putnam Focused and Goldman Sachs

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

Diversification Opportunities for Putnam Focused and Goldman Sachs

0.92

Correlation Coefficient

Putnam Focused  Goldman Sachs

Almost no diversification

The 3 months correlation between Putnam and Goldman is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and Goldman Sachs SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs SP 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs SP has no effect on the direction of Putnam Focused i.e., Putnam Focused and Goldman Sachs go up and down completely randomly.

Pair Corralation between Putnam Focused and Goldman Sachs

Given the investment horizon of 90 days Putnam Focused Large is expected to generate 1.61 times more return on investment than Goldman Sachs. However, Putnam Focused is 1.61 times more volatile than Goldman Sachs SP. It trades about 0.12 of its potential returns per unit of risk. Goldman Sachs SP is currently generating about 0.17 per unit of risk. If you would invest  2,079  in Putnam Focused Large on October 4, 2024 and sell it today you would earn a total of  1,800  from holding Putnam Focused Large or generate 86.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	60.2%
Values	Daily Returns

Putnam Focused Large  vs.  Goldman Sachs SP

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.

Goldman Sachs SP

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Putnam Focused and Goldman Sachs

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

The idea behind Putnam Focused Large and Goldman Sachs SP 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.