Correlation Between Putnam International and Putnam Income
Can any of the company-specific risk be diversified away by investing in both Putnam International and Putnam Income 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 Income 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 Income Fund, you can compare the effects of market volatilities on Putnam International and Putnam Income 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 Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Putnam Income.
Diversification Opportunities for Putnam International and Putnam Income
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Putnam and Putnam is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Equity and Putnam Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Income 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 Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Income has no effect on the direction of Putnam International i.e., Putnam International and Putnam Income go up and down completely randomly.
Pair Corralation between Putnam International and Putnam Income
Assuming the 90 days horizon Putnam International Equity is expected to generate 2.28 times more return on investment than Putnam Income. However, Putnam International is 2.28 times more volatile than Putnam Income Fund. It trades about 0.41 of its potential returns per unit of risk. Putnam Income Fund is currently generating about 0.03 per unit of risk. If you would invest 2,463 in Putnam International Equity on November 3, 2024 and sell it today you would earn a total of 160.00 from holding Putnam International Equity or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam International Equity vs. Putnam Income Fund
Performance |
| Timeline |
| Putnam International |
| Putnam Income |
Putnam International and Putnam Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam International and Putnam Income
The main advantage of trading using opposite Putnam International and Putnam Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Putnam Income 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 Income will offset losses from the drop in Putnam Income's long position.| Putnam International vs. Putnam Multi Cap Growth | Putnam International vs. George Putnam Fund | Putnam International vs. Putnam Equity Income | Putnam International vs. Putnam International Capital |
| Putnam Income vs. George Putnam Fund | Putnam Income vs. Putnam Equity Income | Putnam Income vs. Putnam International Equity | Putnam Income vs. Putnam Dynamic Asset |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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