Correlation Between Putnam Global and Praxis Small
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Praxis Small 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 Praxis Small 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 Praxis Small Cap, you can compare the effects of market volatilities on Putnam Global and Praxis Small 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 Praxis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Praxis Small.
Diversification Opportunities for Putnam Global and Praxis Small
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and PRAXIS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Praxis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Small Cap 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 Praxis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Small Cap has no effect on the direction of Putnam Global i.e., Putnam Global and Praxis Small go up and down completely randomly.
Pair Corralation between Putnam Global and Praxis Small
Assuming the 90 days horizon Putnam Global is expected to generate 7.79 times less return on investment than Praxis Small. But when comparing it to its historical volatility, Putnam Global Financials is 2.36 times less risky than Praxis Small. It trades about 0.02 of its potential returns per unit of risk. Praxis Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,075 in Praxis Small Cap on October 26, 2024 and sell it today you would earn a total of 43.00 from holding Praxis Small Cap or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Financials vs. Praxis Small Cap
Performance |
| Timeline |
| Putnam Global Financials |
| Praxis Small Cap |
Putnam Global and Praxis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Praxis Small
The main advantage of trading using opposite Putnam Global and Praxis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Praxis Small 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 Praxis Small will offset losses from the drop in Praxis Small's long position.| Putnam Global vs. Putnam Equity Income | Putnam Global vs. Putnam Tax Exempt | Putnam Global vs. Putnam Floating Rate | Putnam Global vs. Putnam Floating Rate |
| Praxis Small vs. Angel Oak Financial | Praxis Small vs. Putnam Global Financials | Praxis Small vs. Davis Financial Fund | Praxis Small vs. Gabelli Global Financial |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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