Correlation Between VIIX and Putnam Focused

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

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

Diversification Opportunities for VIIX and Putnam Focused

-0.91

Correlation Coefficient

VIIX  Putnam Focused

Pay attention - limited upside

The 3 months correlation between VIIX and Putnam is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and Putnam Focused Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Large and VIIX 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 VIIX are associated (or correlated) with Putnam Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Focused Large has no effect on the direction of VIIX i.e., VIIX and Putnam Focused go up and down completely randomly.

Pair Corralation between VIIX and Putnam Focused

If you would invest  3,554  in Putnam Focused Large on October 1, 2024 and sell it today you would earn a total of  398.70  from holding Putnam Focused Large or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	3.17%
Values	Daily Returns

VIIX  vs.  Putnam Focused Large

VIIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, VIIX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam Focused Large

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Focused Large are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Putnam Focused may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VIIX and Putnam Focused

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

The idea behind VIIX and Putnam Focused Large 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.