Correlation Between Tiaa Cref and Putnam Global

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

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

Diversification Opportunities for Tiaa Cref and Putnam Global

0.29

Correlation Coefficient

Tiaa Cref  Putnam Global

Modest diversification

The 3 months correlation between Tiaa and Putnam is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Mid Cap Growth and Putnam Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Financials and Tiaa Cref 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 Tiaa Cref Mid Cap Growth 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 Financials has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and Putnam Global go up and down completely randomly.

Pair Corralation between Tiaa Cref and Putnam Global

Assuming the 90 days horizon Tiaa Cref Mid Cap Growth is expected to generate 1.99 times more return on investment than Putnam Global. However, Tiaa Cref is 1.99 times more volatile than Putnam Global Financials. It trades about -0.15 of its potential returns per unit of risk. Putnam Global Financials is currently generating about -0.35 per unit of risk. If you would invest  2,276  in Tiaa Cref Mid Cap Growth on October 9, 2024 and sell it today you would lose (85.00) from holding Tiaa Cref Mid Cap Growth or give up 3.73% of portfolio value over 90 days.

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

Tiaa Cref Mid Cap Growth  vs.  Putnam Global Financials

Tiaa Cref Mid

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Mid Cap Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tiaa Cref may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Putnam Global Financials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Global Financials has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary 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 Tiaa Cref and Putnam Global

The main advantage of trading using opposite Tiaa Cref and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa Cref 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 Tiaa Cref Mid Cap Growth and Putnam Global Financials 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.