Correlation Between Putnam Diversified and Clearbridge Large

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

By analyzing existing cross correlation between Putnam Diversified Income and Clearbridge Large Cap, you can compare the effects of market volatilities on Putnam Diversified and Clearbridge Large 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 Diversified with a short position of Clearbridge Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Diversified and Clearbridge Large.

Diversification Opportunities for Putnam Diversified and Clearbridge Large

0.0

Correlation Coefficient

Putnam Diversified  Clearbridge Large

Pay attention - limited upside

The 3 months correlation between Putnam and Clearbridge is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Diversified Income and Clearbridge Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Large Cap and Putnam Diversified 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 Diversified Income are associated (or correlated) with Clearbridge Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Large Cap has no effect on the direction of Putnam Diversified i.e., Putnam Diversified and Clearbridge Large go up and down completely randomly.

Pair Corralation between Putnam Diversified and Clearbridge Large

Assuming the 90 days horizon Putnam Diversified is expected to generate 4.26 times less return on investment than Clearbridge Large. But when comparing it to its historical volatility, Putnam Diversified Income is 4.11 times less risky than Clearbridge Large. It trades about 0.07 of its potential returns per unit of risk. Clearbridge Large Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,601  in Clearbridge Large Cap on October 24, 2024 and sell it today you would earn a total of  1,809  from holding Clearbridge Large Cap or generate 39.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Putnam Diversified Income  vs.  Clearbridge Large Cap

Putnam Diversified Income

Risk-Adjusted Performance

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Very Weak

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

Clearbridge Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearbridge Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Clearbridge Large 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 Diversified and Clearbridge Large

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

The idea behind Putnam Diversified Income and Clearbridge Large Cap 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.