Correlation Between Putnam Growth and Barloworld
Can any of the company-specific risk be diversified away by investing in both Putnam Growth and Barloworld 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 Growth and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Growth Opportunities and Barloworld Ltd ADR, you can compare the effects of market volatilities on Putnam Growth and Barloworld 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 Growth with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Growth and Barloworld.
Diversification Opportunities for Putnam Growth and Barloworld
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Putnam and Barloworld is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Growth Opportunities and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Putnam Growth 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 Growth Opportunities are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Putnam Growth i.e., Putnam Growth and Barloworld go up and down completely randomly.
Pair Corralation between Putnam Growth and Barloworld
Assuming the 90 days horizon Putnam Growth Opportunities is expected to generate 0.35 times more return on investment than Barloworld. However, Putnam Growth Opportunities is 2.84 times less risky than Barloworld. It trades about -0.03 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about -0.14 per unit of risk. If you would invest 6,978 in Putnam Growth Opportunities on November 27, 2024 and sell it today you would lose (51.00) from holding Putnam Growth Opportunities or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Growth Opportunities vs. Barloworld Ltd ADR
Performance |
| Timeline |
| Putnam Growth Opport |
| Barloworld ADR |
Putnam Growth and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Growth and Barloworld
The main advantage of trading using opposite Putnam Growth and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Growth position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| Putnam Growth vs. Putnam Equity Income | Putnam Growth vs. Putnam Multi Cap Growth | Putnam Growth vs. Putnam Global Health | Putnam Growth vs. Putnam International Equity |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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