Correlation Between Putnam Global and VivoPower International

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

Diversification Opportunities for Putnam Global and VivoPower International

0.12

Correlation Coefficient

Putnam Global  VivoPower International

Average diversification

The 3 months correlation between Putnam and VivoPower is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Technology and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International 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 VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of Putnam Global i.e., Putnam Global and VivoPower International go up and down completely randomly.

Pair Corralation between Putnam Global and VivoPower International

Assuming the 90 days horizon Putnam Global Technology is expected to under-perform the VivoPower International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Putnam Global Technology is 7.87 times less risky than VivoPower International. The mutual fund trades about -0.04 of its potential returns per unit of risk. The VivoPower International PLC is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  92.00  in VivoPower International PLC on September 23, 2024 and sell it today you would earn a total of  49.00  from holding VivoPower International PLC or generate 53.26% return on investment over 90 days.

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

Putnam Global Technology  vs.  VivoPower International PLC

Putnam Global Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Technology are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Putnam Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VivoPower International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putnam Global and VivoPower International

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

The idea behind Putnam Global Technology and VivoPower International PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.