Correlation Between Putnam Small and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Putnam Small and Putnam Global 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 Small and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Small Cap and Putnam Global Industrials, you can compare the effects of market volatilities on Putnam Small and Putnam Global 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 Small with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Small and Putnam Global.
Diversification Opportunities for Putnam Small and Putnam Global
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putnam and Putnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Small Cap and Putnam Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Industrials and Putnam Small 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 Small Cap are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Industrials has no effect on the direction of Putnam Small i.e., Putnam Small and Putnam Global go up and down completely randomly.
Pair Corralation between Putnam Small and Putnam Global
Assuming the 90 days horizon Putnam Small is expected to generate 1.27 times less return on investment than Putnam Global. In addition to that, Putnam Small is 1.54 times more volatile than Putnam Global Industrials. It trades about 0.06 of its total potential returns per unit of risk. Putnam Global Industrials is currently generating about 0.11 per unit of volatility. If you would invest 2,360 in Putnam Global Industrials on August 29, 2024 and sell it today you would earn a total of 1,343 from holding Putnam Global Industrials or generate 56.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Small Cap vs. Putnam Global Industrials
Performance |
| Timeline |
| Putnam Small Cap |
| Putnam Global Industrials |
Putnam Small and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Small and Putnam Global
The main advantage of trading using opposite Putnam Small and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Small position performs unexpectedly, Putnam Global 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 Global will offset losses from the drop in Putnam Global's long position.| Putnam Small vs. Vanguard Small Cap Value | Putnam Small vs. Vanguard Small Cap Value | Putnam Small vs. American Beacon Small |
| Putnam Global vs. Franklin Moderate Allocation | Putnam Global vs. Pgim Conservative Retirement | Putnam Global vs. Calvert Moderate Allocation | Putnam Global vs. Blackrock Moderate Prepared |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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