Correlation Between Putnam Focused and SCOR PK

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

Diversification Opportunities for Putnam Focused and SCOR PK

0.36

Correlation Coefficient

Putnam Focused  SCOR PK

Weak diversification

The 3 months correlation between Putnam and SCOR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Focused Large and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK 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 SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Putnam Focused i.e., Putnam Focused and SCOR PK go up and down completely randomly.

Pair Corralation between Putnam Focused and SCOR PK

Given the investment horizon of 90 days Putnam Focused Large is expected to under-perform the SCOR PK. But the etf apears to be less risky and, when comparing its historical volatility, Putnam Focused Large is 3.69 times less risky than SCOR PK. The etf trades about -0.03 of its potential returns per unit of risk. The SCOR PK is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  216.00  in SCOR PK on October 5, 2024 and sell it today you would earn a total of  31.00  from holding SCOR PK or generate 14.35% return on investment over 90 days.

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

Putnam Focused Large  vs.  SCOR PK

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.

SCOR PK

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCOR PK are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SCOR PK showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putnam Focused and SCOR PK

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

The idea behind Putnam Focused Large and SCOR PK 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.