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 Municipal, 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
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Old is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Financials and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal 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 Municipal 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 under-perform the Old Westbury. In addition to that, Putnam Global is 3.66 times more volatile than Old Westbury Municipal. It trades about -0.32 of its total potential returns per unit of risk. Old Westbury Municipal is currently generating about -0.3 per unit of volatility. If you would invest 1,146 in Old Westbury Municipal on October 16, 2024 and sell it today you would lose (11.00) from holding Old Westbury Municipal or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Financials vs. Old Westbury Municipal
Performance |
| Timeline |
| Putnam Global Financials |
| Old Westbury Municipal |
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. Qs Global Equity | Putnam Global vs. Calvert International Equity | Putnam Global vs. Monteagle Enhanced Equity | Putnam Global vs. Artisan Select Equity |
| Old Westbury vs. Great West Moderately Aggressive | Old Westbury vs. Moderate Balanced Allocation | Old Westbury vs. Putnam Retirement Advantage | Old Westbury vs. Sierra E Retirement |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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