Correlation Between Putnam Global and Locorr Market
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Locorr Market 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 Locorr Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Global Health and Locorr Market Trend, you can compare the effects of market volatilities on Putnam Global and Locorr Market 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 Locorr Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Locorr Market.
Diversification Opportunities for Putnam Global and Locorr Market
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Locorr is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Health and Locorr Market Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Market Trend 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 Health are associated (or correlated) with Locorr Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Market Trend has no effect on the direction of Putnam Global i.e., Putnam Global and Locorr Market go up and down completely randomly.
Pair Corralation between Putnam Global and Locorr Market
Assuming the 90 days horizon Putnam Global Health is expected to generate 0.61 times more return on investment than Locorr Market. However, Putnam Global Health is 1.64 times less risky than Locorr Market. It trades about -0.13 of its potential returns per unit of risk. Locorr Market Trend is currently generating about -0.12 per unit of risk. If you would invest 7,078 in Putnam Global Health on September 13, 2024 and sell it today you would lose (144.00) from holding Putnam Global Health or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Health vs. Locorr Market Trend
Performance |
| Timeline |
| Putnam Global Health |
| Locorr Market Trend |
Putnam Global and Locorr Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Locorr Market
The main advantage of trading using opposite Putnam Global and Locorr Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Locorr Market 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 Locorr Market will offset losses from the drop in Locorr Market'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 High Yield |
| Locorr Market vs. Ab Government Exchange | Locorr Market vs. Hsbc Treasury Money | Locorr Market vs. The Gabelli Money | Locorr Market vs. Franklin Government Money |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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