Correlation Between Putnam Multicap and Invesco Global

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

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

Diversification Opportunities for Putnam Multicap and Invesco Global

-0.72

Correlation Coefficient

Putnam Multicap  Invesco Global

Pay attention - limited upside

The 3 months correlation between Putnam and Invesco is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Multicap Core and Invesco Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Health and Putnam Multicap 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 Multicap Core are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Health has no effect on the direction of Putnam Multicap i.e., Putnam Multicap and Invesco Global go up and down completely randomly.

Pair Corralation between Putnam Multicap and Invesco Global

Assuming the 90 days horizon Putnam Multicap Core is expected to generate 0.86 times more return on investment than Invesco Global. However, Putnam Multicap Core is 1.16 times less risky than Invesco Global. It trades about 0.36 of its potential returns per unit of risk. Invesco Global Health is currently generating about 0.04 per unit of risk. If you would invest  4,374  in Putnam Multicap Core on September 4, 2024 and sell it today you would earn a total of  268.00  from holding Putnam Multicap Core or generate 6.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Putnam Multicap Core  vs.  Invesco Global Health

Putnam Multicap Core

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Multicap Core are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Putnam Multicap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco Global Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Invesco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Putnam Multicap and Invesco Global

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

The idea behind Putnam Multicap Core and Invesco Global Health 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.