Correlation Between Microsoft and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Putnam Global Income, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Putnam Global.
Diversification Opportunities for Microsoft and Putnam Global
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Putnam is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Putnam Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Income and Microsoft 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 Microsoft 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 Income has no effect on the direction of Microsoft i.e., Microsoft and Putnam Global go up and down completely randomly.
Pair Corralation between Microsoft and Putnam Global
Given the investment horizon of 90 days Microsoft is expected to under-perform the Putnam Global. In addition to that, Microsoft is 6.94 times more volatile than Putnam Global Income. It trades about -0.04 of its total potential returns per unit of risk. Putnam Global Income is currently generating about -0.08 per unit of volatility. If you would invest 1,010 in Putnam Global Income on August 27, 2024 and sell it today you would lose (4.00) from holding Putnam Global Income or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Putnam Global Income
Performance |
| Timeline |
| Microsoft |
| Putnam Global Income |
Microsoft and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Putnam Global
The main advantage of trading using opposite Microsoft and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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