Correlation Between Putnam Sustainable and Putnam Focused
Can any of the company-specific risk be diversified away by investing in both Putnam Sustainable and Putnam Focused 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 Sustainable and Putnam Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Sustainable Leaders and Putnam Focused Large, you can compare the effects of market volatilities on Putnam Sustainable and Putnam Focused 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 Sustainable with a short position of Putnam Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Sustainable and Putnam Focused.
Diversification Opportunities for Putnam Sustainable and Putnam Focused
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Putnam is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Sustainable Leaders and Putnam Focused Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Focused Large and Putnam Sustainable 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 Sustainable Leaders are associated (or correlated) with Putnam Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Focused Large has no effect on the direction of Putnam Sustainable i.e., Putnam Sustainable and Putnam Focused go up and down completely randomly.
Pair Corralation between Putnam Sustainable and Putnam Focused
Given the investment horizon of 90 days Putnam Sustainable is expected to generate 1.01 times less return on investment than Putnam Focused. In addition to that, Putnam Sustainable is 1.17 times more volatile than Putnam Focused Large. It trades about 0.1 of its total potential returns per unit of risk. Putnam Focused Large is currently generating about 0.12 per unit of volatility. If you would invest 3,568 in Putnam Focused Large on September 1, 2024 and sell it today you would earn a total of 431.00 from holding Putnam Focused Large or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Putnam Sustainable Leaders vs. Putnam Focused Large
Performance |
| Timeline |
| Putnam Sustainable |
| Putnam Focused Large |
Putnam Sustainable and Putnam Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Sustainable and Putnam Focused
The main advantage of trading using opposite Putnam Sustainable and Putnam Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Sustainable position performs unexpectedly, Putnam Focused 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 Focused will offset losses from the drop in Putnam Focused's long position.| Putnam Sustainable vs. Vanguard Growth Index | Putnam Sustainable vs. iShares Russell 1000 | Putnam Sustainable vs. iShares SP 500 | Putnam Sustainable vs. iShares Core SP |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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