Correlation Between Vanguard Short and Putnam International
Can any of the company-specific risk be diversified away by investing in both Vanguard Short 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 Vanguard Short and Putnam International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Short Term Federal and Putnam International Equity, you can compare the effects of market volatilities on Vanguard Short 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 Vanguard Short with a short position of Putnam International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short and Putnam International.
Diversification Opportunities for Vanguard Short and Putnam International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and PUTNAM is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Federal and Putnam International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam International and Vanguard Short 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 Vanguard Short Term Federal 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 Vanguard Short i.e., Vanguard Short and Putnam International go up and down completely randomly.
Pair Corralation between Vanguard Short and Putnam International
Assuming the 90 days horizon Vanguard Short is expected to generate 2.11 times less return on investment than Putnam International. But when comparing it to its historical volatility, Vanguard Short Term Federal is 4.39 times less risky than Putnam International. It trades about 0.1 of its potential returns per unit of risk. Putnam International Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,202 in Putnam International Equity on November 27, 2024 and sell it today you would earn a total of 420.00 from holding Putnam International Equity or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vanguard Short Term Federal vs. Putnam International Equity
Performance |
| Timeline |
| Vanguard Short Term |
| Putnam International |
Vanguard Short and Putnam International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Short and Putnam International
The main advantage of trading using opposite Vanguard Short and Putnam International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short 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.| Vanguard Short vs. Vanguard Short Term Treasury | Vanguard Short vs. Vanguard Intermediate Term Treasury | Vanguard Short vs. Vanguard Short Term Bond | Vanguard Short vs. Vanguard Long Term Treasury |
| Putnam International vs. Growth Allocation Fund | Putnam International vs. Balanced Allocation Fund | Putnam International vs. Franklin Moderate Allocation | Putnam International vs. Gmo Asset Allocation |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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