Correlation Between Empire State and Putnam International
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Putnam International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Putnam International Equity, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Putnam International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Putnam International.
Diversification Opportunities for Empire State and Putnam International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Empire and Putnam is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Putnam International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International and Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and Putnam International go up and down completely randomly.
Pair Corralation between Empire State and Putnam International
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.67 times more return on investment than Putnam International. However, Empire State is 1.67 times more volatile than Putnam International Equity. It trades about 0.13 of its potential returns per unit of risk. Putnam International Equity is currently generating about 0.04 per unit of risk. If you would invest 1,060 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Empire State Realty or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. Putnam International Equity
Performance |
| Timeline |
| Empire State Realty |
| Putnam International |
Empire State and Putnam International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Putnam International
The main advantage of trading using opposite Empire State and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Putnam International vs. Putnam Equity Income | Putnam International vs. Putnam Tax Exempt | Putnam International vs. Putnam Floating Rate | Putnam International vs. Putnam High Yield |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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