Correlation Between Putnam California and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Putnam California 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 Putnam California and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam California Tax and Putnam Global Health, you can compare the effects of market volatilities on Putnam California 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 Putnam California with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam California and Putnam Global.
Diversification Opportunities for Putnam California and Putnam Global
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Putnam and Putnam is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Putnam California Tax and Putnam Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Health and Putnam California 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 California Tax 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 Health has no effect on the direction of Putnam California i.e., Putnam California and Putnam Global go up and down completely randomly.
Pair Corralation between Putnam California and Putnam Global
Assuming the 90 days horizon Putnam California is expected to generate 1.79 times less return on investment than Putnam Global. But when comparing it to its historical volatility, Putnam California Tax is 3.37 times less risky than Putnam Global. It trades about 0.14 of its potential returns per unit of risk. Putnam Global Health is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,058 in Putnam Global Health on August 24, 2024 and sell it today you would earn a total of 803.00 from holding Putnam Global Health or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam California Tax vs. Putnam Global Health
Performance |
| Timeline |
| Putnam California Tax |
| Putnam Global Health |
Putnam California and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam California and Putnam Global
The main advantage of trading using opposite Putnam California and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam California 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.| Putnam California vs. T Rowe Price | Putnam California vs. Tax Managed Large Cap | Putnam California vs. Pace Large Growth | Putnam California vs. Aqr Large Cap |
| Putnam Global vs. Vanguard Health Care | Putnam Global vs. Vanguard Health Care | Putnam Global vs. T Rowe Price | Putnam Global vs. T Rowe Price |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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