Correlation Between Putnam Global and Alphacentric Lifesci
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Alphacentric Lifesci 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 Alphacentric Lifesci 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 Alphacentric Lifesci Healthcare, you can compare the effects of market volatilities on Putnam Global and Alphacentric Lifesci 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 Alphacentric Lifesci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Alphacentric Lifesci.
Diversification Opportunities for Putnam Global and Alphacentric Lifesci
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Alphacentric is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Health and Alphacentric Lifesci Healthcar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphacentric Lifesci 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 Alphacentric Lifesci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphacentric Lifesci has no effect on the direction of Putnam Global i.e., Putnam Global and Alphacentric Lifesci go up and down completely randomly.
Pair Corralation between Putnam Global and Alphacentric Lifesci
Assuming the 90 days horizon Putnam Global Health is expected to generate 0.56 times more return on investment than Alphacentric Lifesci. However, Putnam Global Health is 1.8 times less risky than Alphacentric Lifesci. It trades about 0.08 of its potential returns per unit of risk. Alphacentric Lifesci Healthcare is currently generating about 0.03 per unit of risk. If you would invest 6,055 in Putnam Global Health on September 4, 2024 and sell it today you would earn a total of 1,036 from holding Putnam Global Health or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Health vs. Alphacentric Lifesci Healthcar
Performance |
| Timeline |
| Putnam Global Health |
| Alphacentric Lifesci |
Putnam Global and Alphacentric Lifesci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Alphacentric Lifesci
The main advantage of trading using opposite Putnam Global and Alphacentric Lifesci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Alphacentric Lifesci 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 Alphacentric Lifesci will offset losses from the drop in Alphacentric Lifesci'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 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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