Correlation Between X Financial and Putnam Global

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

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

Diversification Opportunities for X Financial and Putnam Global

-0.24

Correlation Coefficient

X Financial  Putnam Global

Very good diversification

The 3 months correlation between XYF and Putnam is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class 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 X Financial 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 X Financial Class 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 X Financial i.e., X Financial and Putnam Global go up and down completely randomly.

Pair Corralation between X Financial and Putnam Global

Considering the 90-day investment horizon X Financial Class is expected to generate 2.57 times more return on investment than Putnam Global. However, X Financial is 2.57 times more volatile than Putnam Global Technology. It trades about 0.21 of its potential returns per unit of risk. Putnam Global Technology is currently generating about -0.32 per unit of risk. If you would invest  710.00  in X Financial Class on October 4, 2024 and sell it today you would earn a total of  131.00  from holding X Financial Class or generate 18.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

X Financial Class  vs.  Putnam Global Technology

X Financial Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Putnam Global Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with X Financial and Putnam Global

The main advantage of trading using opposite X Financial and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Financial 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 X Financial Class 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.