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 Incm 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 Incm 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 Incm 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 Incm is expected to generate 0.36 times more return on investment than Putnam International. However, Putnam Global Incm is 2.77 times less risky than Putnam International. It trades about 0.02 of its potential returns per unit of risk. Putnam International Capital is currently generating about -0.15 per unit of risk. If you would invest 1,010 in Putnam Global Incm on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Putnam Global Incm or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Putnam Global Incm vs. Putnam International Capital
Performance |
| Timeline |
| Putnam Global Incm |
| 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.| Putnam Global vs. Kinetics Small Cap | Putnam Global vs. Vanguard Strategic Small Cap | Putnam Global vs. Baird Smallmid Cap | Putnam Global vs. Fisher Small Cap |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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