Correlation Between Putnam Focused and RAYTHEON

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

Diversification Opportunities for Putnam Focused and RAYTHEON

-0.26

Correlation Coefficient

Putnam Focused  RAYTHEON

Very good diversification

The 3 months correlation between Putnam and RAYTHEON is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES 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 RAYTHEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAYTHEON TECHNOLOGIES has no effect on the direction of Putnam Focused i.e., Putnam Focused and RAYTHEON go up and down completely randomly.

Pair Corralation between Putnam Focused and RAYTHEON

Given the investment horizon of 90 days Putnam Focused Large is expected to generate 0.52 times more return on investment than RAYTHEON. However, Putnam Focused Large is 1.92 times less risky than RAYTHEON. It trades about 0.09 of its potential returns per unit of risk. RAYTHEON TECHNOLOGIES PORATION is currently generating about 0.01 per unit of risk. If you would invest  3,689  in Putnam Focused Large on October 12, 2024 and sell it today you would earn a total of  213.00  from holding Putnam Focused Large or generate 5.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.89%
Values	Daily Returns

Putnam Focused Large  vs.  RAYTHEON TECHNOLOGIES PORATION

Putnam Focused Large

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Focused Large are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Putnam Focused is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days RAYTHEON TECHNOLOGIES PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RAYTHEON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Putnam Focused and RAYTHEON

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

The idea behind Putnam Focused Large and RAYTHEON TECHNOLOGIES PORATION 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.