Correlation Between Putnam International and Champlain Small
Can any of the company-specific risk be diversified away by investing in both Putnam International and Champlain Small 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 Champlain Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam International Capital and Champlain Small, you can compare the effects of market volatilities on Putnam International and Champlain Small 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 Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Champlain Small.
Diversification Opportunities for Putnam International and Champlain Small
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Champlain is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Capital and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small 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 Capital are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Putnam International i.e., Putnam International and Champlain Small go up and down completely randomly.
Pair Corralation between Putnam International and Champlain Small
Assuming the 90 days horizon Putnam International is expected to generate 1.12 times less return on investment than Champlain Small. But when comparing it to its historical volatility, Putnam International Capital is 1.17 times less risky than Champlain Small. It trades about 0.13 of its potential returns per unit of risk. Champlain Small is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,268 in Champlain Small on November 4, 2024 and sell it today you would earn a total of 49.00 from holding Champlain Small or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam International Capital vs. Champlain Small
Performance |
| Timeline |
| Putnam International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Champlain Small |
Putnam International and Champlain Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam International and Champlain Small
The main advantage of trading using opposite Putnam International and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Champlain Small 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 Champlain Small will offset losses from the drop in Champlain Small's long position.| Putnam International vs. Fabwx | Putnam International vs. Fkhemx | Putnam International vs. Ftufox | Putnam International vs. Fvkvwx |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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