Correlation Between VHAI and Putnam Global
Can any of the company-specific risk be diversified away by investing in both VHAI 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 VHAI and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VHAI and Putnam Global Technology, you can compare the effects of market volatilities on VHAI 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 VHAI with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of VHAI and Putnam Global.
Diversification Opportunities for VHAI and Putnam Global
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VHAI and Putnam is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Putnam Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Technology and VHAI 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 VHAI 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 Technology has no effect on the direction of VHAI i.e., VHAI and Putnam Global go up and down completely randomly.
Pair Corralation between VHAI and Putnam Global
Given the investment horizon of 90 days VHAI is expected to under-perform the Putnam Global. In addition to that, VHAI is 10.0 times more volatile than Putnam Global Technology. It trades about -0.17 of its total potential returns per unit of risk. Putnam Global Technology is currently generating about 0.11 per unit of volatility. If you would invest 4,178 in Putnam Global Technology on September 2, 2024 and sell it today you would earn a total of 3,753 from holding Putnam Global Technology or generate 89.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 39.11% |
| Values | Daily Returns |
VHAI vs. Putnam Global Technology
Performance |
| Timeline |
| VHAI |
| Putnam Global Technology |
VHAI and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VHAI and Putnam Global
The main advantage of trading using opposite VHAI and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI 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.The idea behind VHAI and Putnam Global Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Putnam Global vs. Blackrock Science Technology | Putnam Global vs. Columbia Global Technology | Putnam Global vs. Putnam Growth Opportunities | Putnam Global vs. Morgan Stanley Multi |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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