Correlation Between Putnam Sustainable and Pax Global

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

By analyzing existing cross correlation between Putnam Sustainable Leaders and Pax Global Environmental, you can compare the effects of market volatilities on Putnam Sustainable and Pax Global 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 Sustainable with a short position of Pax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Sustainable and Pax Global.

Diversification Opportunities for Putnam Sustainable and Pax Global

0.3

Correlation Coefficient

Putnam Sustainable  Pax Global

Weak diversification

The 3 months correlation between Putnam and Pax is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Sustainable Leaders and Pax Global Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Global Environmental and Putnam Sustainable 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 Sustainable Leaders are associated (or correlated) with Pax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Global Environmental has no effect on the direction of Putnam Sustainable i.e., Putnam Sustainable and Pax Global go up and down completely randomly.

Pair Corralation between Putnam Sustainable and Pax Global

Given the investment horizon of 90 days Putnam Sustainable Leaders is expected to generate 0.92 times more return on investment than Pax Global. However, Putnam Sustainable Leaders is 1.08 times less risky than Pax Global. It trades about 0.11 of its potential returns per unit of risk. Pax Global Environmental is currently generating about 0.03 per unit of risk. If you would invest  2,210  in Putnam Sustainable Leaders on October 7, 2024 and sell it today you would earn a total of  1,154  from holding Putnam Sustainable Leaders or generate 52.22% return on investment over 90 days.

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

Putnam Sustainable Leaders  vs.  Pax Global Environmental

Putnam Sustainable

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Sustainable Leaders are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Putnam Sustainable is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pax Global Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pax Global Environmental 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 Sustainable and Pax Global

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

The idea behind Putnam Sustainable Leaders and Pax Global Environmental 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..