Correlation Between Velo3D and Putnam Global

Can any of the company-specific risk be diversified away by investing in both Velo3D 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 Velo3D and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Velo3D Inc and Putnam Global Technology, you can compare the effects of market volatilities on Velo3D 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 Velo3D with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velo3D and Putnam Global.

Diversification Opportunities for Velo3D and Putnam Global

-0.45

Correlation Coefficient

Velo3D  Putnam Global

Very good diversification

The 3 months correlation between Velo3D and Putnam is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Velo3D Inc and Putnam Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Technology and Velo3D 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 Velo3D Inc 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 Technology has no effect on the direction of Velo3D i.e., Velo3D and Putnam Global go up and down completely randomly.

Pair Corralation between Velo3D and Putnam Global

Considering the 90-day investment horizon Velo3D Inc is expected to under-perform the Putnam Global. In addition to that, Velo3D is 7.24 times more volatile than Putnam Global Technology. It trades about -0.06 of its total potential returns per unit of risk. Putnam Global Technology is currently generating about 0.12 per unit of volatility. If you would invest  3,273  in Putnam Global Technology on September 22, 2024 and sell it today you would earn a total of  3,095  from holding Putnam Global Technology or generate 94.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.92%
Values	Daily Returns

Velo3D Inc  vs.  Putnam Global Technology

Velo3D Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Velo3D Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Velo3D is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Putnam Global Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Technology are ranked lower than 4 (%) 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 Velo3D and Putnam Global

The main advantage of trading using opposite Velo3D and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velo3D 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 Velo3D Inc and Putnam Global Technology 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.