Correlation Between Putnam ETF and Invesco FTSE
Can any of the company-specific risk be diversified away by investing in both Putnam ETF and Invesco FTSE 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 Putnam ETF and Invesco FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam ETF Trust and Invesco FTSE RAFI, you can compare the effects of market volatilities on Putnam ETF and Invesco FTSE 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 Putnam ETF with a short position of Invesco FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam ETF and Invesco FTSE.
Diversification Opportunities for Putnam ETF and Invesco FTSE
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Putnam and Invesco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Putnam ETF Trust and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI and Putnam ETF 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 Putnam ETF Trust are associated (or correlated) with Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of Putnam ETF i.e., Putnam ETF and Invesco FTSE go up and down completely randomly.
Pair Corralation between Putnam ETF and Invesco FTSE
Given the investment horizon of 90 days Putnam ETF Trust is expected to generate 1.13 times more return on investment than Invesco FTSE. However, Putnam ETF is 1.13 times more volatile than Invesco FTSE RAFI. It trades about 0.37 of its potential returns per unit of risk. Invesco FTSE RAFI is currently generating about 0.22 per unit of risk. If you would invest 3,342 in Putnam ETF Trust on October 20, 2024 and sell it today you would earn a total of 161.00 from holding Putnam ETF Trust or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Putnam ETF Trust vs. Invesco FTSE RAFI
Performance |
| Timeline |
| Putnam ETF Trust |
| Invesco FTSE RAFI |
Putnam ETF and Invesco FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam ETF and Invesco FTSE
The main advantage of trading using opposite Putnam ETF and Invesco FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam ETF position performs unexpectedly, Invesco FTSE 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 Invesco FTSE will offset losses from the drop in Invesco FTSE's long position.| Putnam ETF vs. Financial Select Sector | Putnam ETF vs. Vanguard Financials Index | Putnam ETF vs. SPDR SP Regional | Putnam ETF vs. SPDR SP Bank |
| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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