Correlation Between VivoPower International and Putnam High

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

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

Diversification Opportunities for VivoPower International and Putnam High

0.47

Correlation Coefficient

VivoPower International  Putnam High

Very weak diversification

The 3 months correlation between VivoPower and Putnam is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Putnam High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Yield and VivoPower International 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 VivoPower International PLC are associated (or correlated) with Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Yield has no effect on the direction of VivoPower International i.e., VivoPower International and Putnam High go up and down completely randomly.

Pair Corralation between VivoPower International and Putnam High

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 59.64 times more return on investment than Putnam High. However, VivoPower International is 59.64 times more volatile than Putnam High Yield. It trades about 0.04 of its potential returns per unit of risk. Putnam High Yield is currently generating about 0.13 per unit of risk. If you would invest  240.00  in VivoPower International PLC on September 22, 2024 and sell it today you would lose (99.00) from holding VivoPower International PLC or give up 41.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

VivoPower International PLC  vs.  Putnam High Yield

VivoPower International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Putnam High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with VivoPower International and Putnam High

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

The idea behind VivoPower International PLC and Putnam High Yield 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.