Correlation Between Putnam Focused and Aston Martin

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

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

Diversification Opportunities for Putnam Focused and Aston Martin

-0.02

Correlation Coefficient

Putnam Focused  Aston Martin

Good diversification

The 3 months correlation between Putnam and Aston is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Putnam Focused 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 Focused Large are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Putnam Focused i.e., Putnam Focused and Aston Martin go up and down completely randomly.

Pair Corralation between Putnam Focused and Aston Martin

Given the investment horizon of 90 days Putnam Focused Large is expected to generate 0.23 times more return on investment than Aston Martin. However, Putnam Focused Large is 4.43 times less risky than Aston Martin. It trades about 0.08 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.02 per unit of risk. If you would invest  2,799  in Putnam Focused Large on October 5, 2024 and sell it today you would earn a total of  913.00  from holding Putnam Focused Large or generate 32.62% return on investment over 90 days.

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

Putnam Focused Large  vs.  Aston Martin Lagonda

Putnam Focused Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Focused Large has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Putnam Focused is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Aston Martin Lagonda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Putnam Focused and Aston Martin

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

The idea behind Putnam Focused Large and Aston Martin Lagonda 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.