Correlation Between Putnam Global and Franklin Moderate
Can any of the company-specific risk be diversified away by investing in both Putnam Global and Franklin Moderate 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 Franklin Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Global Industrials and Franklin Moderate Allocation, you can compare the effects of market volatilities on Putnam Global and Franklin Moderate 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 Franklin Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Franklin Moderate.
Diversification Opportunities for Putnam Global and Franklin Moderate
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Franklin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Industrials and Franklin Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Moderate 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 Industrials are associated (or correlated) with Franklin Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Moderate has no effect on the direction of Putnam Global i.e., Putnam Global and Franklin Moderate go up and down completely randomly.
Pair Corralation between Putnam Global and Franklin Moderate
Assuming the 90 days horizon Putnam Global Industrials is expected to generate 1.73 times more return on investment than Franklin Moderate. However, Putnam Global is 1.73 times more volatile than Franklin Moderate Allocation. It trades about 0.33 of its potential returns per unit of risk. Franklin Moderate Allocation is currently generating about 0.35 per unit of risk. If you would invest 3,525 in Putnam Global Industrials on September 1, 2024 and sell it today you would earn a total of 187.00 from holding Putnam Global Industrials or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Global Industrials vs. Franklin Moderate Allocation
Performance |
| Timeline |
| Putnam Global Industrials |
| Franklin Moderate |
Putnam Global and Franklin Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Global and Franklin Moderate
The main advantage of trading using opposite Putnam Global and Franklin Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Franklin Moderate 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 Franklin Moderate will offset losses from the drop in Franklin Moderate'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 |
| Franklin Moderate vs. Jennison Natural Resources | Franklin Moderate vs. Oil Gas Ultrasector | Franklin Moderate vs. Clearbridge Energy Mlp | Franklin Moderate vs. Alpsalerian Energy Infrastructure |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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