Correlation Between SPDR SP and Putnam ETF
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and Putnam ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Bank and Putnam ETF Trust, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of Putnam ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Putnam ETF.
Diversification Opportunities for SPDR SP and Putnam ETF
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Putnam is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Bank 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 SPDR SP 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 SPDR SP Bank 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 SPDR SP i.e., SPDR SP and Putnam ETF go up and down completely randomly.
Pair Corralation between SPDR SP and Putnam ETF
Considering the 90-day investment horizon SPDR SP Bank is expected to generate 2.2 times more return on investment than Putnam ETF. However, SPDR SP is 2.2 times more volatile than Putnam ETF Trust. It trades about 0.05 of its potential returns per unit of risk. Putnam ETF Trust is currently generating about 0.1 per unit of risk. If you would invest 4,330 in SPDR SP Bank on August 30, 2024 and sell it today you would earn a total of 1,871 from holding SPDR SP Bank or generate 43.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Bank vs. Putnam ETF Trust
Performance |
| Timeline |
| SPDR SP Bank |
| Putnam ETF Trust |
SPDR SP and Putnam ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Putnam ETF
The main advantage of trading using opposite SPDR SP and Putnam ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. SPDR SP Regional | SPDR SP vs. SPDR SP Insurance | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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