Correlation Between Putnam Global and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Old Westbury 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 Old Westbury 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 Old Westbury Fixed, you can compare the effects of market volatilities on Putnam Global and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Old Westbury.
Diversification Opportunities for Putnam Global and Old Westbury
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Old is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Old Westbury Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Fixed 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Fixed has no effect on the direction of Putnam Global i.e., Putnam Global and Old Westbury go up and down completely randomly.
Pair Corralation between Putnam Global and Old Westbury
Assuming the 90 days horizon Putnam Global Financials is expected to generate 2.09 times more return on investment than Old Westbury. However, Putnam Global is 2.09 times more volatile than Old Westbury Fixed. It trades about 0.08 of its potential returns per unit of risk. Old Westbury Fixed is currently generating about 0.05 per unit of risk. If you would invest 968.00 in Putnam Global Financials on November 3, 2024 and sell it today you would earn a total of 84.00 from holding Putnam Global Financials or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 84.62% |
| Values | Daily Returns |
Putnam Global Financials vs. Old Westbury Fixed
Performance |
| Timeline |
| Putnam Global Financials |
| Old Westbury Fixed |
Putnam Global and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Old Westbury
The main advantage of trading using opposite Putnam Global and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Putnam Global vs. First Eagle Gold | Putnam Global vs. Precious Metals And | Putnam Global vs. Oppenheimer Gold Special | Putnam Global vs. Deutsche Gold Precious |
| Old Westbury vs. Oppenheimer Gold Special | Old Westbury vs. Fidelity Advisor Gold | Old Westbury vs. First Eagle Gold | Old Westbury vs. James Balanced Golden |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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