Correlation Between Old Westbury and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Old Westbury 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 Old Westbury and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Fixed and Putnam Global Financials, you can compare the effects of market volatilities on Old Westbury 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 Old Westbury with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Putnam Global.
Diversification Opportunities for Old Westbury and Putnam Global
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Putnam is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Fixed 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 Old Westbury 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 Old Westbury Fixed 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 Old Westbury i.e., Old Westbury and Putnam Global go up and down completely randomly.
Pair Corralation between Old Westbury and Putnam Global
Assuming the 90 days horizon Old Westbury Fixed is expected to generate 0.31 times more return on investment than Putnam Global. However, Old Westbury Fixed is 3.2 times less risky than Putnam Global. It trades about -0.29 of its potential returns per unit of risk. Putnam Global Financials is currently generating about -0.31 per unit of risk. If you would invest 1,003 in Old Westbury Fixed on October 14, 2024 and sell it today you would lose (11.00) from holding Old Westbury Fixed or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Fixed vs. Putnam Global Financials
Performance |
| Timeline |
| Old Westbury Fixed |
| Putnam Global Financials |
Old Westbury and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Putnam Global
The main advantage of trading using opposite Old Westbury and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury 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.| Old Westbury vs. Deutsche Gold Precious | Old Westbury vs. Goldman Sachs Short | Old Westbury vs. Short Precious Metals | Old Westbury vs. Gold And Precious |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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