Correlation Between Thrivent Natural and Putnam International

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

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

Diversification Opportunities for Thrivent Natural and Putnam International

0.04

Correlation Coefficient

Thrivent Natural  Putnam International

Significant diversification

The 3 months correlation between Thrivent and Putnam is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Thrivent Natural Resources and Putnam International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International and Thrivent Natural 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 Thrivent Natural Resources 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 Thrivent Natural i.e., Thrivent Natural and Putnam International go up and down completely randomly.

Pair Corralation between Thrivent Natural and Putnam International

Assuming the 90 days horizon Thrivent Natural is expected to generate 1.01 times less return on investment than Putnam International. But when comparing it to its historical volatility, Thrivent Natural Resources is 7.57 times less risky than Putnam International. It trades about 0.2 of its potential returns per unit of risk. Putnam International Equity is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,307  in Putnam International Equity on October 11, 2024 and sell it today you would earn a total of  226.00  from holding Putnam International Equity or generate 9.8% return on investment over 90 days.

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

Thrivent Natural Resources  vs.  Putnam International Equity

Thrivent Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thrivent Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Thrivent Natural 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 Equity 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 Thrivent Natural and Putnam International

The main advantage of trading using opposite Thrivent Natural and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thrivent Natural 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 Thrivent Natural Resources and Putnam International Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.