Correlation Between Putnam International and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Putnam International and Vanguard Total 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 Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam International Equity and Vanguard Total International, you can compare the effects of market volatilities on Putnam International and Vanguard Total 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 Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Vanguard Total.
Diversification Opportunities for Putnam International and Vanguard Total
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Putnam and Vanguard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Equity and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter 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 Equity are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of Putnam International i.e., Putnam International and Vanguard Total go up and down completely randomly.
Pair Corralation between Putnam International and Vanguard Total
Assuming the 90 days horizon Putnam International Equity is expected to generate 1.06 times more return on investment than Vanguard Total. However, Putnam International is 1.06 times more volatile than Vanguard Total International. It trades about 0.06 of its potential returns per unit of risk. Vanguard Total International is currently generating about 0.06 per unit of risk. If you would invest 2,123 in Putnam International Equity on September 4, 2024 and sell it today you would earn a total of 515.00 from holding Putnam International Equity or generate 24.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam International Equity vs. Vanguard Total International
Performance |
| Timeline |
| Putnam International |
| Vanguard Total Inter |
Putnam International and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam International and Vanguard Total
The main advantage of trading using opposite Putnam International and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| Putnam International vs. Putnam Multi Cap Growth | Putnam International vs. George Putnam Fund | Putnam International vs. Putnam Equity Income | Putnam International vs. Putnam Growth Opportunities |
| Vanguard Total vs. Ab Global Risk | Vanguard Total vs. Gmo High Yield | Vanguard Total vs. Vanguard Star Fund | Vanguard Total vs. Artisan High Income |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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