Correlation Between Putnam International and Putnam Equity
Can any of the company-specific risk be diversified away by investing in both Putnam International and Putnam Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Putnam International and Putnam Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Putnam Equity.
Diversification Opportunities for Putnam International and Putnam Equity
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PUTNAM and Putnam is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Equity and Putnam Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Equity 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Equity Income has no effect on the direction of Putnam International i.e., Putnam International and Putnam Equity go up and down completely randomly.
Pair Corralation between Putnam International and Putnam Equity
Assuming the 90 days horizon Putnam International Equity is expected to under-perform the Putnam Equity. In addition to that, Putnam International is 1.28 times more volatile than Putnam Equity Income. It trades about -0.04 of its total potential returns per unit of risk. Putnam Equity Income is currently generating about 0.16 per unit of volatility. If you would invest 3,656 in Putnam Equity Income on September 3, 2024 and sell it today you would earn a total of 240.00 from holding Putnam Equity Income or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam International Equity vs. Putnam Equity Income
Performance |
| Timeline |
| Putnam International |
| Putnam Equity Income |
Putnam International and Putnam Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam International and Putnam Equity
The main advantage of trading using opposite Putnam International and Putnam Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Putnam Equity 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 Equity will offset losses from the drop in Putnam Equity's long position.| Putnam International vs. Gabelli Gold Fund | Putnam International vs. Goldman Sachs Clean | Putnam International vs. Gamco Global Gold | Putnam International vs. International Investors Gold |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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