Correlation Between Putnam International and Putnam U

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Can any of the company-specific risk be diversified away by investing in both Putnam International and Putnam U 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 International and Putnam U into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam International Value and Putnam U S, you can compare the effects of market volatilities on Putnam International and Putnam U 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 International with a short position of Putnam U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Putnam U.

Diversification Opportunities for Putnam International and Putnam U

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between PUTNAM and PUTNAM is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Value and Putnam U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam U S and Putnam International 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 International Value are associated (or correlated) with Putnam U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam U S has no effect on the direction of Putnam International i.e., Putnam International and Putnam U go up and down completely randomly.

Pair Corralation between Putnam International and Putnam U

If you would invest  868.00  in Putnam U S on August 27, 2024 and sell it today you would earn a total of  0.00  from holding Putnam U S or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Putnam International Value  vs.  Putnam U S

 Performance 
       Timeline  
Putnam International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Putnam International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Putnam International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Putnam U S 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Putnam U S are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Putnam U is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnam International and Putnam U Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Putnam International and Putnam U

The main advantage of trading using opposite Putnam International and Putnam U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Putnam U 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 U will offset losses from the drop in Putnam U's long position.
The idea behind Putnam International Value and Putnam U S 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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