Correlation Between Putnam Sustainable and T Rowe

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

Diversification Opportunities for Putnam Sustainable and T Rowe

0.99

Correlation Coefficient

Putnam Sustainable  T Rowe

No risk reduction

The 3 months correlation between Putnam and RPMGX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Sustainable Future and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Putnam Sustainable i.e., Putnam Sustainable and T Rowe go up and down completely randomly.

Pair Corralation between Putnam Sustainable and T Rowe

Assuming the 90 days horizon Putnam Sustainable Future is expected to under-perform the T Rowe. In addition to that, Putnam Sustainable is 1.41 times more volatile than T Rowe Price. It trades about -0.1 of its total potential returns per unit of risk. T Rowe Price is currently generating about -0.08 per unit of volatility. If you would invest  9,993  in T Rowe Price on December 28, 2024 and sell it today you would lose (531.00) from holding T Rowe Price or give up 5.31% of portfolio value over 90 days.

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

Putnam Sustainable Future  vs.  T Rowe Price

Putnam Sustainable Future

Risk-Adjusted Performance

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 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.

T Rowe Price

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, T Rowe 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 Sustainable and T Rowe

The main advantage of trading using opposite Putnam Sustainable and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Sustainable position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Putnam Sustainable Future and T Rowe Price 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.