Correlation Between Franklin Moderate and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate 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 Franklin Moderate and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Moderate Allocation and Putnam Global Industrials, you can compare the effects of market volatilities on Franklin Moderate 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 Franklin Moderate with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Putnam Global.
Diversification Opportunities for Franklin Moderate and Putnam Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Putnam is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Putnam Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Industrials and Franklin Moderate 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 Franklin Moderate Allocation 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 Industrials has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Putnam Global go up and down completely randomly.
Pair Corralation between Franklin Moderate and Putnam Global
Assuming the 90 days horizon Franklin Moderate is expected to generate 1.89 times less return on investment than Putnam Global. But when comparing it to its historical volatility, Franklin Moderate Allocation is 1.69 times less risky than Putnam Global. It trades about 0.12 of its potential returns per unit of risk. Putnam Global Industrials is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,218 in Putnam Global Industrials on September 1, 2024 and sell it today you would earn a total of 494.00 from holding Putnam Global Industrials or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Putnam Global Industrials
Performance |
| Timeline |
| Franklin Moderate |
| Putnam Global Industrials |
Franklin Moderate and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Putnam Global
The main advantage of trading using opposite Franklin Moderate and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate 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.| Franklin Moderate vs. Jennison Natural Resources | Franklin Moderate vs. Oil Gas Ultrasector | Franklin Moderate vs. Clearbridge Energy Mlp | Franklin Moderate vs. Alpsalerian Energy Infrastructure |
| Putnam Global vs. Putnam Equity Income | Putnam Global vs. Putnam Tax Exempt | Putnam Global vs. Putnam Floating Rate | Putnam Global 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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