Correlation Between Putnam International and SCOR PK
Can any of the company-specific risk be diversified away by investing in both Putnam International and SCOR PK 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 SCOR PK 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 SCOR PK, you can compare the effects of market volatilities on Putnam International and SCOR PK 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 SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and SCOR PK.
Diversification Opportunities for Putnam International and SCOR PK
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Putnam and SCOR is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Capital and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK 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 SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Putnam International i.e., Putnam International and SCOR PK go up and down completely randomly.
Pair Corralation between Putnam International and SCOR PK
Assuming the 90 days horizon Putnam International Capital is expected to generate about the same return on investment as SCOR PK. But, Putnam International Capital is 3.98 times less risky than SCOR PK. It trades about 0.04 of its potential returns per unit of risk. SCOR PK is currently generating about 0.01 per unit of risk. If you would invest 265.00 in SCOR PK on September 13, 2024 and sell it today you would lose (9.00) from holding SCOR PK or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam International Capital vs. SCOR PK
Performance |
| Timeline |
| Putnam International |
| SCOR PK |
Putnam International and SCOR PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam International and SCOR PK
The main advantage of trading using opposite Putnam International and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, SCOR PK 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 SCOR PK will offset losses from the drop in SCOR PK's long position.The idea behind Putnam International Capital and SCOR PK 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.
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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