Correlation Between Putnam Small and Putnam International
Can any of the company-specific risk be diversified away by investing in both Putnam Small and Putnam International 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 International 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 International Capital, you can compare the effects of market volatilities on Putnam Small and Putnam International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Small and Putnam International.
Diversification Opportunities for Putnam Small and Putnam International
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Putnam and Putnam is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Small Cap and Putnam International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam International has no effect on the direction of Putnam Small i.e., Putnam Small and Putnam International go up and down completely randomly.
Pair Corralation between Putnam Small and Putnam International
Assuming the 90 days horizon Putnam Small Cap is expected to generate 1.97 times more return on investment than Putnam International. However, Putnam Small is 1.97 times more volatile than Putnam International Capital. It trades about 0.28 of its potential returns per unit of risk. Putnam International Capital is currently generating about -0.15 per unit of risk. If you would invest 1,755 in Putnam Small Cap on August 30, 2024 and sell it today you would earn a total of 161.00 from holding Putnam Small Cap or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Putnam Small Cap vs. Putnam International Capital
Performance |
| Timeline |
| Putnam Small Cap |
| Putnam International |
Putnam Small and Putnam International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Small and Putnam International
The main advantage of trading using opposite Putnam Small and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Small position performs unexpectedly, Putnam International 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 International will offset losses from the drop in Putnam International's long position.| Putnam Small vs. T Rowe Price | Putnam Small vs. T Rowe Price | Putnam Small vs. Baird Strategic Municipal | Putnam Small vs. Counterpoint Tactical Municipal |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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