Correlation Between Innovator ETFs and Putnam Sustainable
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Putnam Sustainable 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 Innovator ETFs and Putnam Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator ETFs Trust and Putnam Sustainable Leaders, you can compare the effects of market volatilities on Innovator ETFs and Putnam Sustainable 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 Innovator ETFs with a short position of Putnam Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Putnam Sustainable.
Diversification Opportunities for Innovator ETFs and Putnam Sustainable
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovator and Putnam is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Putnam Sustainable Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Sustainable and Innovator ETFs 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 Innovator ETFs Trust are associated (or correlated) with Putnam Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Sustainable has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Putnam Sustainable go up and down completely randomly.
Pair Corralation between Innovator ETFs and Putnam Sustainable
Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.2 times less return on investment than Putnam Sustainable. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.01 times less risky than Putnam Sustainable. It trades about 0.09 of its potential returns per unit of risk. Putnam Sustainable Leaders is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,408 in Putnam Sustainable Leaders on August 30, 2024 and sell it today you would earn a total of 66.00 from holding Putnam Sustainable Leaders or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Putnam Sustainable Leaders
Performance |
| Timeline |
| Innovator ETFs Trust |
| Putnam Sustainable |
Innovator ETFs and Putnam Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Putnam Sustainable
The main advantage of trading using opposite Innovator ETFs and Putnam Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Putnam Sustainable 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 Sustainable will offset losses from the drop in Putnam Sustainable's long position.| Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator Growth Accelerated | Innovator ETFs vs. Innovator Growth 100 Accelerated | Innovator ETFs vs. Innovator ETFs Trust |
| Putnam Sustainable vs. Putnam Sustainable Future | Putnam Sustainable vs. Putnam Focused Large | Putnam Sustainable vs. Putnam Focused Large | Putnam Sustainable vs. Overlay Shares Hedged |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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