Correlation Between NYSE Composite and Putnam Sustainable
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Putnam Sustainable 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 NYSE Composite and Putnam Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Putnam Sustainable Future, you can compare the effects of market volatilities on NYSE Composite and Putnam Sustainable 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 NYSE Composite with a short position of Putnam Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Putnam Sustainable.
Diversification Opportunities for NYSE Composite and Putnam Sustainable
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Putnam is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Putnam Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Sustainable Future and NYSE Composite 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 NYSE Composite are associated (or correlated) with Putnam Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Sustainable Future has no effect on the direction of NYSE Composite i.e., NYSE Composite and Putnam Sustainable go up and down completely randomly.
Pair Corralation between NYSE Composite and Putnam Sustainable
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.51 times less return on investment than Putnam Sustainable. But when comparing it to its historical volatility, NYSE Composite is 1.38 times less risky than Putnam Sustainable. It trades about 0.08 of its potential returns per unit of risk. Putnam Sustainable Future is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,771 in Putnam Sustainable Future on November 19, 2024 and sell it today you would earn a total of 864.00 from holding Putnam Sustainable Future or generate 48.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. Putnam Sustainable Future
Performance |
| Timeline |
NYSE Composite and Putnam Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Putnam Sustainable Future
Pair trading matchups for Putnam Sustainable
Pair Trading with NYSE Composite and Putnam Sustainable
The main advantage of trading using opposite NYSE Composite and Putnam Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Putnam Sustainable 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 Sustainable will offset losses from the drop in Putnam Sustainable's long position.| NYSE Composite vs. Regeneron Pharmaceuticals | NYSE Composite vs. Compania Cervecerias Unidas | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Monster Beverage Corp |
| Putnam Sustainable vs. Putnam Sustainable Leaders | Putnam Sustainable vs. Putnam Focused Large | Putnam Sustainable vs. FlexShares STOXX Global | Putnam Sustainable vs. Putnam Focused Large |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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