Correlation Between 3M and Putnam Global
Can any of the company-specific risk be diversified away by investing in both 3M 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 3M and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and Putnam Global Equity, you can compare the effects of market volatilities on 3M 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 3M with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Putnam Global.
Diversification Opportunities for 3M and Putnam Global
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 3M and Putnam is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Putnam Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Equity and 3M 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 3M Company 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 Equity has no effect on the direction of 3M i.e., 3M and Putnam Global go up and down completely randomly.
Pair Corralation between 3M and Putnam Global
Considering the 90-day investment horizon 3M is expected to generate 1.05 times less return on investment than Putnam Global. In addition to that, 3M is 1.78 times more volatile than Putnam Global Equity. It trades about 0.22 of its total potential returns per unit of risk. Putnam Global Equity is currently generating about 0.41 per unit of volatility. If you would invest 1,432 in Putnam Global Equity on November 18, 2024 and sell it today you would earn a total of 91.00 from holding Putnam Global Equity or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. Putnam Global Equity
Performance |
| Timeline |
| 3M Company |
| Putnam Global Equity |
3M and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and Putnam Global
The main advantage of trading using opposite 3M and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M 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.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| Putnam Global vs. Us Government Securities | Putnam Global vs. Wilmington Municipal Bond | Putnam Global vs. Short Term Government Fund | Putnam Global vs. Us Government Securities |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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