Correlation Between Short Oil and Putnam International

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

By analyzing existing cross correlation between Short Oil Gas and Putnam International Value, you can compare the effects of market volatilities on Short Oil and Putnam International 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 Short Oil with a short position of Putnam International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and Putnam International.

Diversification Opportunities for Short Oil and Putnam International

-0.5

Correlation Coefficient

Short Oil  Putnam International

Very good diversification

The 3 months correlation between Short and Putnam is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Putnam International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International and Short Oil 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 Short Oil Gas are associated (or correlated) with Putnam International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam International has no effect on the direction of Short Oil i.e., Short Oil and Putnam International go up and down completely randomly.

Pair Corralation between Short Oil and Putnam International

Assuming the 90 days horizon Short Oil is expected to generate 11.89 times less return on investment than Putnam International. In addition to that, Short Oil is 1.59 times more volatile than Putnam International Value. It trades about 0.0 of its total potential returns per unit of risk. Putnam International Value is currently generating about 0.05 per unit of volatility. If you would invest  1,102  in Putnam International Value on October 9, 2024 and sell it today you would earn a total of  246.00  from holding Putnam International Value or generate 22.32% return on investment over 90 days.

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

Short Oil Gas  vs.  Putnam International Value

Short Oil Gas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Short Oil Gas are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Short Oil and Putnam International

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

The idea behind Short Oil Gas and Putnam International Value 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.