Correlation Between Putnam Convertible and Putnam Global

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

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

Diversification Opportunities for Putnam Convertible and Putnam Global

0.72

Correlation Coefficient

Putnam Convertible  Putnam Global

Poor diversification

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

Pair Corralation between Putnam Convertible and Putnam Global

Assuming the 90 days horizon Putnam Convertible Incm Gwth is expected to under-perform the Putnam Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Putnam Convertible Incm Gwth is 1.35 times less risky than Putnam Global. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Putnam Global Industrials is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  3,055  in Putnam Global Industrials on December 4, 2024 and sell it today you would lose (75.00) from holding Putnam Global Industrials or give up 2.45% of portfolio value over 90 days.

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

Putnam Convertible Incm Gwth  vs.  Putnam Global Industrials

Putnam Convertible Incm

Risk-Adjusted Performance

Very Weak

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

Putnam Global Industrials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Global Industrials has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Putnam Convertible and Putnam Global

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

The idea behind Putnam Convertible Incm Gwth and Putnam Global Industrials 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.