Correlation Between Putnam Global and Morgan Stanley

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

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

Diversification Opportunities for Putnam Global and Morgan Stanley

0.86

Correlation Coefficient

Putnam Global  Morgan Stanley

Very poor diversification

The 3 months correlation between Putnam and Morgan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Technology and Morgan Stanley Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Multi 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 Technology are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Multi has no effect on the direction of Putnam Global i.e., Putnam Global and Morgan Stanley go up and down completely randomly.

Pair Corralation between Putnam Global and Morgan Stanley

Assuming the 90 days horizon Putnam Global Technology is expected to under-perform the Morgan Stanley. But the mutual fund apears to be less risky and, when comparing its historical volatility, Putnam Global Technology is 1.25 times less risky than Morgan Stanley. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Morgan Stanley Multi is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,893  in Morgan Stanley Multi on December 29, 2024 and sell it today you would lose (398.00) from holding Morgan Stanley Multi or give up 10.22% of portfolio value over 90 days.

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

Putnam Global Technology  vs.  Morgan Stanley Multi

Putnam Global Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Morgan Stanley Multi

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Putnam Global and Morgan Stanley

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

The idea behind Putnam Global Technology and Morgan Stanley Multi 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..