Correlation Between Short-term Government and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Short-term Government 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 Short-term Government and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Term Government Fund and Putnam Global Industrials, you can compare the effects of market volatilities on Short-term Government 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 Short-term Government with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Government and Putnam Global.
Diversification Opportunities for Short-term Government and Putnam Global
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Short-term and Putnam is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund 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 Short-term Government 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 Short Term Government 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 Industrials has no effect on the direction of Short-term Government i.e., Short-term Government and Putnam Global go up and down completely randomly.
Pair Corralation between Short-term Government and Putnam Global
Assuming the 90 days horizon Short Term Government Fund is expected to under-perform the Putnam Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Term Government Fund is 6.9 times less risky than Putnam Global. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Putnam Global Industrials is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,241 in Putnam Global Industrials on September 1, 2024 and sell it today you would earn a total of 170.00 from holding Putnam Global Industrials or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Short Term Government Fund vs. Putnam Global Industrials
Performance |
| Timeline |
| Short Term Government |
| Putnam Global Industrials |
Short-term Government and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-term Government and Putnam Global
The main advantage of trading using opposite Short-term Government and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Government 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.| Short-term Government vs. T Rowe Price | Short-term Government vs. Dodge Global Stock | Short-term Government vs. Ms Global Fixed | Short-term Government vs. Us Global Leaders |
| Putnam Global vs. Putnam Equity Income | Putnam Global vs. Putnam Tax Exempt | Putnam Global vs. Putnam Floating Rate | Putnam Global vs. Putnam High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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