Correlation Between Dow Jones and Putnam ETF
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Putnam ETF 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 Dow Jones and Putnam ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Putnam ETF Trust, you can compare the effects of market volatilities on Dow Jones and Putnam ETF 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 Dow Jones with a short position of Putnam ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Putnam ETF.
Diversification Opportunities for Dow Jones and Putnam ETF
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Putnam is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Putnam ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam ETF Trust and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Putnam ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam ETF Trust has no effect on the direction of Dow Jones i.e., Dow Jones and Putnam ETF go up and down completely randomly.
Pair Corralation between Dow Jones and Putnam ETF
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.42 times less return on investment than Putnam ETF. But when comparing it to its historical volatility, Dow Jones Industrial is 1.17 times less risky than Putnam ETF. It trades about 0.08 of its potential returns per unit of risk. Putnam ETF Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,285 in Putnam ETF Trust on August 30, 2024 and sell it today you would earn a total of 1,161 from holding Putnam ETF Trust or generate 50.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Putnam ETF Trust
Performance |
| Timeline |
Dow Jones and Putnam ETF Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Putnam ETF Trust
Pair trading matchups for Putnam ETF
Pair Trading with Dow Jones and Putnam ETF
The main advantage of trading using opposite Dow Jones and Putnam ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Putnam ETF 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 ETF will offset losses from the drop in Putnam ETF's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Putnam ETF vs. Putnam Sustainable Future | Putnam ETF vs. Putnam Sustainable Leaders | Putnam ETF vs. Putnam Focused Large | Putnam ETF vs. Putnam Biorevolution ETF |
Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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