Correlation Between Rbc Small and Putnam Global

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

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

Diversification Opportunities for Rbc Small and Putnam Global

0.44

Correlation Coefficient

Rbc Small  Putnam Global

Very weak diversification

The 3 months correlation between Rbc and Putnam is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Small Cap 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 Rbc Small 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 Rbc Small Cap 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 Rbc Small i.e., Rbc Small and Putnam Global go up and down completely randomly.

Pair Corralation between Rbc Small and Putnam Global

Assuming the 90 days horizon Rbc Small Cap is expected to generate 0.99 times more return on investment than Putnam Global. However, Rbc Small Cap is 1.01 times less risky than Putnam Global. It trades about 0.28 of its potential returns per unit of risk. Putnam Global Industrials is currently generating about 0.05 per unit of risk. If you would invest  1,567  in Rbc Small Cap on October 24, 2024 and sell it today you would earn a total of  76.00  from holding Rbc Small Cap or generate 4.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Rbc Small Cap  vs.  Putnam Global Industrials

Rbc Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rbc Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Putnam Global Industrials

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund'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 fund investors.

Pair Trading with Rbc Small and Putnam Global

The main advantage of trading using opposite Rbc Small and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rbc Small 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 Rbc Small Cap 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.