Correlation Between Energy Services and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Energy Services 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 Energy Services and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Putnam Global Financials, you can compare the effects of market volatilities on Energy Services 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 Energy Services with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Putnam Global.
Diversification Opportunities for Energy Services and Putnam Global
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Putnam is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and Putnam Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Financials and Energy Services 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 Energy Services Fund 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 Financials has no effect on the direction of Energy Services i.e., Energy Services and Putnam Global go up and down completely randomly.
Pair Corralation between Energy Services and Putnam Global
Assuming the 90 days horizon Energy Services Fund is expected to under-perform the Putnam Global. In addition to that, Energy Services is 2.86 times more volatile than Putnam Global Financials. It trades about 0.0 of its total potential returns per unit of risk. Putnam Global Financials is currently generating about 0.27 per unit of volatility. If you would invest 1,032 in Putnam Global Financials on November 8, 2024 and sell it today you would earn a total of 29.00 from holding Putnam Global Financials or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. Putnam Global Financials
Performance |
| Timeline |
| Energy Services |
| Putnam Global Financials |
Energy Services and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Putnam Global
The main advantage of trading using opposite Energy Services and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services 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.| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
| Putnam Global vs. Allianzgi Diversified Income | Putnam Global vs. Calvert Conservative Allocation | Putnam Global vs. Guggenheim Diversified Income | Putnam Global vs. Fulcrum Diversified Absolute |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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