Correlation Between Putnam International and Putnam Short
Can any of the company-specific risk be diversified away by investing in both Putnam International and Putnam Short 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 Putnam Short 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 Putnam Short Duration, you can compare the effects of market volatilities on Putnam International and Putnam Short 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 Putnam Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Putnam Short.
Diversification Opportunities for Putnam International and Putnam Short
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Putnam and Putnam is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Equity and Putnam Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Short Duration 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 Putnam Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Short Duration has no effect on the direction of Putnam International i.e., Putnam International and Putnam Short go up and down completely randomly.
Pair Corralation between Putnam International and Putnam Short
Assuming the 90 days horizon Putnam International Equity is expected to generate 8.08 times more return on investment than Putnam Short. However, Putnam International is 8.08 times more volatile than Putnam Short Duration. It trades about 0.07 of its potential returns per unit of risk. Putnam Short Duration is currently generating about 0.21 per unit of risk. If you would invest 2,011 in Putnam International Equity on August 28, 2024 and sell it today you would earn a total of 566.00 from holding Putnam International Equity or generate 28.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam International Equity vs. Putnam Short Duration
Performance |
| Timeline |
| Putnam International |
| Putnam Short Duration |
Putnam International and Putnam Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam International and Putnam Short
The main advantage of trading using opposite Putnam International and Putnam Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Putnam Short 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 Short will offset losses from the drop in Putnam Short's long position.| Putnam International vs. Putnam Equity Income | Putnam International vs. Putnam Tax Exempt | Putnam International vs. Putnam Floating Rate | Putnam International vs. Putnam High Yield |
| Putnam Short vs. Putnam Equity Income | Putnam Short vs. Putnam Tax Exempt | Putnam Short vs. Putnam Floating Rate | Putnam Short vs. Putnam High Yield |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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