Correlation Between Hennessy Large and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Hennessy Large 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 Hennessy Large and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Large Cap and Putnam Global Financials, you can compare the effects of market volatilities on Hennessy Large 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 Hennessy Large with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Large and Putnam Global.
Diversification Opportunities for Hennessy Large and Putnam Global
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and Putnam is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Large Cap and Putnam Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Financials and Hennessy Large 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 Hennessy Large Cap 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 Financials has no effect on the direction of Hennessy Large i.e., Hennessy Large and Putnam Global go up and down completely randomly.
Pair Corralation between Hennessy Large and Putnam Global
Assuming the 90 days horizon Hennessy Large Cap is expected to generate 2.59 times more return on investment than Putnam Global. However, Hennessy Large is 2.59 times more volatile than Putnam Global Financials. It trades about 0.27 of its potential returns per unit of risk. Putnam Global Financials is currently generating about 0.2 per unit of risk. If you would invest 3,061 in Hennessy Large Cap on November 5, 2024 and sell it today you would earn a total of 203.00 from holding Hennessy Large Cap or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Large Cap vs. Putnam Global Financials
Performance |
| Timeline |
| Hennessy Large Cap |
| Putnam Global Financials |
Hennessy Large and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Large and Putnam Global
The main advantage of trading using opposite Hennessy Large and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Large 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.| Hennessy Large vs. Hennessy Large Cap | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. T Rowe Price |
| Putnam Global vs. Barings Active Short | Putnam Global vs. Kinetics Market Opportunities | Putnam Global vs. Locorr Market Trend | Putnam Global vs. Nasdaq 100 2x Strategy |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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