Correlation Between Wasatch Small and Putnam International

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

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

Diversification Opportunities for Wasatch Small and Putnam International

-0.71

Correlation Coefficient

Wasatch Small  Putnam International

Pay attention - limited upside

The 3 months correlation between Wasatch and Putnam is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Putnam International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International and Wasatch Small 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 Wasatch Small Cap 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 Wasatch Small i.e., Wasatch Small and Putnam International go up and down completely randomly.

Pair Corralation between Wasatch Small and Putnam International

Assuming the 90 days horizon Wasatch Small Cap is expected to under-perform the Putnam International. In addition to that, Wasatch Small is 1.26 times more volatile than Putnam International Capital. It trades about -0.14 of its total potential returns per unit of risk. Putnam International Capital is currently generating about 0.12 per unit of volatility. If you would invest  3,782  in Putnam International Capital on December 29, 2024 and sell it today you would earn a total of  264.00  from holding Putnam International Capital or generate 6.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Wasatch Small Cap  vs.  Putnam International Capital

Wasatch Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wasatch Small Cap 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.

Putnam International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam International Capital are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Putnam International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wasatch Small and Putnam International

The main advantage of trading using opposite Wasatch Small and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Small 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 Wasatch Small Cap and Putnam International Capital 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.