Correlation Between Inverse Emerging and Putnam Global

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

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

Diversification Opportunities for Inverse Emerging and Putnam Global

-0.83

Correlation Coefficient

Inverse Emerging  Putnam Global

Pay attention - limited upside

The 3 months correlation between Inverse and Putnam is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Emerging Markets and Putnam Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Income and Inverse Emerging 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 Inverse Emerging Markets 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 Income has no effect on the direction of Inverse Emerging i.e., Inverse Emerging and Putnam Global go up and down completely randomly.

Pair Corralation between Inverse Emerging and Putnam Global

Assuming the 90 days horizon Inverse Emerging Markets is expected to under-perform the Putnam Global. In addition to that, Inverse Emerging is 13.37 times more volatile than Putnam Global Income. It trades about -0.09 of its total potential returns per unit of risk. Putnam Global Income is currently generating about 0.14 per unit of volatility. If you would invest  980.00  in Putnam Global Income on December 21, 2024 and sell it today you would earn a total of  19.00  from holding Putnam Global Income or generate 1.94% return on investment over 90 days.

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

Inverse Emerging Markets  vs.  Putnam Global Income

Inverse Emerging Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inverse Emerging Markets 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 basic 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.

Putnam Global Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Putnam Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inverse Emerging and Putnam Global

The main advantage of trading using opposite Inverse Emerging and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Emerging 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 Inverse Emerging Markets and Putnam Global Income 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.