Correlation Between Putnam Sustainable and Putnam Biorevolution
Can any of the company-specific risk be diversified away by investing in both Putnam Sustainable and Putnam Biorevolution 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 Putnam Biorevolution 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 Putnam Biorevolution ETF, you can compare the effects of market volatilities on Putnam Sustainable and Putnam Biorevolution 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 Putnam Biorevolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Sustainable and Putnam Biorevolution.
Diversification Opportunities for Putnam Sustainable and Putnam Biorevolution
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Putnam and Putnam is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Sustainable Future and Putnam Biorevolution ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Biorevolution ETF 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 Putnam Biorevolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Biorevolution ETF has no effect on the direction of Putnam Sustainable i.e., Putnam Sustainable and Putnam Biorevolution go up and down completely randomly.
Pair Corralation between Putnam Sustainable and Putnam Biorevolution
Given the investment horizon of 90 days Putnam Sustainable Future is expected to generate 1.13 times more return on investment than Putnam Biorevolution. However, Putnam Sustainable is 1.13 times more volatile than Putnam Biorevolution ETF. It trades about 0.11 of its potential returns per unit of risk. Putnam Biorevolution ETF is currently generating about -0.03 per unit of risk. If you would invest 2,492 in Putnam Sustainable Future on November 1, 2024 and sell it today you would earn a total of 178.47 from holding Putnam Sustainable Future or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Sustainable Future vs. Putnam Biorevolution ETF
Performance |
| Timeline |
| Putnam Sustainable Future |
| Putnam Biorevolution ETF |
Putnam Sustainable and Putnam Biorevolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Sustainable and Putnam Biorevolution
The main advantage of trading using opposite Putnam Sustainable and Putnam Biorevolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Sustainable position performs unexpectedly, Putnam Biorevolution 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 Biorevolution will offset losses from the drop in Putnam Biorevolution's 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 |
| Putnam Biorevolution vs. Health Care Select | Putnam Biorevolution vs. Vanguard Health Care | Putnam Biorevolution vs. iShares Biotechnology ETF | Putnam Biorevolution vs. SPDR SP Biotech |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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