Correlation Between Health Care and Putnam Biorevolution
Can any of the company-specific risk be diversified away by investing in both Health Care and Putnam Biorevolution 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 Health Care and Putnam Biorevolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Select and Putnam Biorevolution ETF, you can compare the effects of market volatilities on Health Care and Putnam Biorevolution 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 Health Care with a short position of Putnam Biorevolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Putnam Biorevolution.
Diversification Opportunities for Health Care and Putnam Biorevolution
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Health and Putnam is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Select and Putnam Biorevolution ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Biorevolution ETF and Health Care 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 Health Care Select are associated (or correlated) with Putnam Biorevolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Biorevolution ETF has no effect on the direction of Health Care i.e., Health Care and Putnam Biorevolution go up and down completely randomly.
Pair Corralation between Health Care and Putnam Biorevolution
Considering the 90-day investment horizon Health Care Select is expected to generate 0.86 times more return on investment than Putnam Biorevolution. However, Health Care Select is 1.16 times less risky than Putnam Biorevolution. It trades about 0.07 of its potential returns per unit of risk. Putnam Biorevolution ETF is currently generating about -0.18 per unit of risk. If you would invest 14,755 in Health Care Select on November 28, 2024 and sell it today you would earn a total of 134.00 from holding Health Care Select or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Select vs. Putnam Biorevolution ETF
Performance |
| Timeline |
| Health Care Select |
| Putnam Biorevolution ETF |
Health Care and Putnam Biorevolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Putnam Biorevolution
The main advantage of trading using opposite Health Care and Putnam Biorevolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Putnam Biorevolution 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 Biorevolution will offset losses from the drop in Putnam Biorevolution's long position.| Health Care vs. Consumer Staples Select | Health Care vs. Industrial Select Sector | Health Care vs. Consumer Discretionary Select | Health Care vs. Utilities Select Sector |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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