Correlation Between Thornburg Limited and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Thornburg Limited 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 Thornburg Limited and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg Limited Term and Putnam Global Financials, you can compare the effects of market volatilities on Thornburg Limited 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 Thornburg Limited with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Limited and Putnam Global.
Diversification Opportunities for Thornburg Limited and Putnam Global
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thornburg and Putnam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Limited Term 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 Thornburg Limited 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 Thornburg Limited Term 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 Thornburg Limited i.e., Thornburg Limited and Putnam Global go up and down completely randomly.
Pair Corralation between Thornburg Limited and Putnam Global
Assuming the 90 days horizon Thornburg Limited is expected to generate 1.85 times less return on investment than Putnam Global. But when comparing it to its historical volatility, Thornburg Limited Term is 3.67 times less risky than Putnam Global. It trades about 0.17 of its potential returns per unit of risk. Putnam Global Financials is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,037 in Putnam Global Financials on October 24, 2024 and sell it today you would earn a total of 7.00 from holding Putnam Global Financials or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg Limited Term vs. Putnam Global Financials
Performance |
| Timeline |
| Thornburg Limited Term |
| Putnam Global Financials |
Thornburg Limited and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg Limited and Putnam Global
The main advantage of trading using opposite Thornburg Limited and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Limited 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.| Thornburg Limited vs. Needham Small Cap | Thornburg Limited vs. Df Dent Small | Thornburg Limited vs. Small Pany Growth | Thornburg Limited vs. Tax Managed Mid Small |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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