Correlation Between Putnam Sustainable and Oppenheimer Gold

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

By analyzing existing cross correlation between Putnam Sustainable Future and Oppenheimer Gold Special, you can compare the effects of market volatilities on Putnam Sustainable and Oppenheimer Gold 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 Oppenheimer Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Sustainable and Oppenheimer Gold.

Diversification Opportunities for Putnam Sustainable and Oppenheimer Gold

0.54

Correlation Coefficient

Putnam Sustainable  Oppenheimer Gold

Very weak diversification

The 3 months correlation between Putnam and Oppenheimer is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Sustainable Future and Oppenheimer Gold Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Gold Special 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 Future are associated (or correlated) with Oppenheimer Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Gold Special has no effect on the direction of Putnam Sustainable i.e., Putnam Sustainable and Oppenheimer Gold go up and down completely randomly.

Pair Corralation between Putnam Sustainable and Oppenheimer Gold

Assuming the 90 days horizon Putnam Sustainable Future is expected to generate 0.98 times more return on investment than Oppenheimer Gold. However, Putnam Sustainable Future is 1.02 times less risky than Oppenheimer Gold. It trades about -0.03 of its potential returns per unit of risk. Oppenheimer Gold Special is currently generating about -0.08 per unit of risk. If you would invest  2,307  in Putnam Sustainable Future on October 25, 2024 and sell it today you would lose (88.00) from holding Putnam Sustainable Future or give up 3.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Putnam Sustainable Future  vs.  Oppenheimer Gold Special

Putnam Sustainable Future

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oppenheimer Gold Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer Gold Special has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Oppenheimer Gold

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

The idea behind Putnam Sustainable Future and Oppenheimer Gold Special 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.