Correlation Between Putnam Master and BlackRock Energy

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

By analyzing existing cross correlation between Putnam Master Intermediate and BlackRock Energy and, you can compare the effects of market volatilities on Putnam Master and BlackRock Energy 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 Master with a short position of BlackRock Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Master and BlackRock Energy.

Diversification Opportunities for Putnam Master and BlackRock Energy

0.73

Correlation Coefficient

Putnam Master  BlackRock Energy

Poor diversification

The 3 months correlation between Putnam and BlackRock is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Master Intermediate and BlackRock Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Energy and Putnam Master 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 Master Intermediate are associated (or correlated) with BlackRock Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Energy has no effect on the direction of Putnam Master i.e., Putnam Master and BlackRock Energy go up and down completely randomly.

Pair Corralation between Putnam Master and BlackRock Energy

Considering the 90-day investment horizon Putnam Master Intermediate is expected to generate 0.63 times more return on investment than BlackRock Energy. However, Putnam Master Intermediate is 1.59 times less risky than BlackRock Energy. It trades about 0.06 of its potential returns per unit of risk. BlackRock Energy and is currently generating about 0.01 per unit of risk. If you would invest  324.00  in Putnam Master Intermediate on December 4, 2024 and sell it today you would earn a total of  7.00  from holding Putnam Master Intermediate or generate 2.16% return on investment over 90 days.

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

Putnam Master Intermediate  vs.  BlackRock Energy and

Putnam Master Interm

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Master Intermediate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Putnam Master is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

BlackRock Energy

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, BlackRock Energy is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Putnam Master and BlackRock Energy

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

The idea behind Putnam Master Intermediate and BlackRock Energy and 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.