Correlation Between Putnam Sustainable and Overlay Shares
Can any of the company-specific risk be diversified away by investing in both Putnam Sustainable and Overlay Shares 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 Sustainable and Overlay Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Sustainable Future and Overlay Shares Hedged, you can compare the effects of market volatilities on Putnam Sustainable and Overlay Shares 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 Sustainable with a short position of Overlay Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Sustainable and Overlay Shares.
Diversification Opportunities for Putnam Sustainable and Overlay Shares
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Overlay is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Sustainable Future and Overlay Shares Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overlay Shares Hedged and Putnam Sustainable 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 Sustainable Future are associated (or correlated) with Overlay Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overlay Shares Hedged has no effect on the direction of Putnam Sustainable i.e., Putnam Sustainable and Overlay Shares go up and down completely randomly.
Pair Corralation between Putnam Sustainable and Overlay Shares
Given the investment horizon of 90 days Putnam Sustainable is expected to generate 1.04 times less return on investment than Overlay Shares. In addition to that, Putnam Sustainable is 1.85 times more volatile than Overlay Shares Hedged. It trades about 0.09 of its total potential returns per unit of risk. Overlay Shares Hedged is currently generating about 0.17 per unit of volatility. If you would invest 3,119 in Overlay Shares Hedged on September 1, 2024 and sell it today you would earn a total of 371.00 from holding Overlay Shares Hedged or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Sustainable Future vs. Overlay Shares Hedged
Performance |
| Timeline |
| Putnam Sustainable Future |
| Overlay Shares Hedged |
Putnam Sustainable and Overlay Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Sustainable and Overlay Shares
The main advantage of trading using opposite Putnam Sustainable and Overlay Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Sustainable position performs unexpectedly, Overlay Shares 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 Overlay Shares will offset losses from the drop in Overlay Shares' long position.| Putnam Sustainable vs. Putnam Sustainable Leaders | Putnam Sustainable vs. Putnam Focused Large | Putnam Sustainable vs. FlexShares STOXX Global | Putnam Sustainable vs. Putnam Focused Large |
| Overlay Shares vs. Vanguard Total Stock | Overlay Shares vs. SPDR SP 500 | Overlay Shares vs. iShares Core SP | Overlay Shares vs. Vanguard Dividend Appreciation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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