Correlation Between Putnam Global and Putnam International
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Putnam International 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 Putnam International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Global Income and Putnam International Capital, you can compare the effects of market volatilities on Putnam Global and Putnam International 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 Putnam International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Putnam International.
Diversification Opportunities for Putnam Global and Putnam International
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Putnam is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Income and Putnam International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International 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 Income are associated (or correlated) with Putnam International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam International has no effect on the direction of Putnam Global i.e., Putnam Global and Putnam International go up and down completely randomly.
Pair Corralation between Putnam Global and Putnam International
Assuming the 90 days horizon Putnam Global is expected to generate 1.96 times less return on investment than Putnam International. But when comparing it to its historical volatility, Putnam Global Income is 2.6 times less risky than Putnam International. It trades about 0.09 of its potential returns per unit of risk. Putnam International Capital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,375 in Putnam International Capital on November 28, 2024 and sell it today you would earn a total of 656.00 from holding Putnam International Capital or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Income vs. Putnam International Capital
Performance |
| Timeline |
| Putnam Global Income |
| Putnam International |
Putnam Global and Putnam International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Putnam International
The main advantage of trading using opposite Putnam Global and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Putnam International 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 International will offset losses from the drop in Putnam International's long position.The idea behind Putnam Global Income and Putnam International Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Putnam International vs. Victory Incore Investment | Putnam International vs. Columbia Convertible Securities | Putnam International vs. Lord Abbett Vertible | Putnam International vs. Forum Funds |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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