Correlation Between Putnam International and Putnam U
Can any of the company-specific risk be diversified away by investing in both Putnam International and Putnam U 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 U 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 U S, you can compare the effects of market volatilities on Putnam International and Putnam U 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 U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Putnam U.
Diversification Opportunities for Putnam International and Putnam U
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Equity and Putnam U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam U S 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 U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam U S has no effect on the direction of Putnam International i.e., Putnam International and Putnam U go up and down completely randomly.
Pair Corralation between Putnam International and Putnam U
Assuming the 90 days horizon Putnam International Equity is expected to generate 1.83 times more return on investment than Putnam U. However, Putnam International is 1.83 times more volatile than Putnam U S. It trades about 0.04 of its potential returns per unit of risk. Putnam U S is currently generating about 0.03 per unit of risk. If you would invest 2,328 in Putnam International Equity on August 26, 2024 and sell it today you would earn a total of 304.00 from holding Putnam International Equity or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam International Equity vs. Putnam U S
Performance |
| Timeline |
| Putnam International |
| Putnam U S |
Putnam International and Putnam U Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam International and Putnam U
The main advantage of trading using opposite Putnam International and Putnam U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Putnam U 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 U will offset losses from the drop in Putnam U'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 U vs. George Putnam Fund | Putnam U vs. Putnam Equity Income | Putnam U vs. Putnam International Equity | Putnam U vs. Aquagold International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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