Correlation Between Putnam Global and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Eafe Fund 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 Global and Eafe Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Global Financials and The Eafe Fund, you can compare the effects of market volatilities on Putnam Global and Eafe Fund 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 Global with a short position of Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Eafe Fund.
Diversification Opportunities for Putnam Global and Eafe Fund
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Eafe is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund and Putnam Global 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 Global Financials are associated (or correlated) with Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of Putnam Global i.e., Putnam Global and Eafe Fund go up and down completely randomly.
Pair Corralation between Putnam Global and Eafe Fund
Assuming the 90 days horizon Putnam Global Financials is expected to generate 0.23 times more return on investment than Eafe Fund. However, Putnam Global Financials is 4.42 times less risky than Eafe Fund. It trades about 0.09 of its potential returns per unit of risk. The Eafe Fund is currently generating about -0.14 per unit of risk. If you would invest 1,037 in Putnam Global Financials on October 24, 2024 and sell it today you would earn a total of 7.00 from holding Putnam Global Financials or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Putnam Global Financials vs. The Eafe Fund
Performance |
| Timeline |
| Putnam Global Financials |
| Eafe Fund |
Putnam Global and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Eafe Fund
The main advantage of trading using opposite Putnam Global and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Eafe Fund 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 Eafe Fund will offset losses from the drop in Eafe Fund's long position.| Putnam Global vs. Mutual Of America | Putnam Global vs. Small Cap Growth Profund | Putnam Global vs. Amg River Road | Putnam Global vs. Great West Loomis Sayles |
| Eafe Fund vs. Salient Mlp Energy | Eafe Fund vs. Jennison Natural Resources | Eafe Fund vs. Vanguard Energy Index | Eafe Fund vs. Franklin Natural Resources |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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