Correlation Between Ab Global and Putnam Global
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and Putnam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and Putnam Global Equity, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of Putnam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Putnam Global.
Diversification Opportunities for Ab Global and Putnam Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GCEYX and Putnam is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and Putnam Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Equity and Ab Global 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 Ab Global E 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 Equity has no effect on the direction of Ab Global i.e., Ab Global and Putnam Global go up and down completely randomly.
Pair Corralation between Ab Global and Putnam Global
Assuming the 90 days horizon Ab Global E is expected to under-perform the Putnam Global. In addition to that, Ab Global is 1.02 times more volatile than Putnam Global Equity. It trades about -0.29 of its total potential returns per unit of risk. Putnam Global Equity is currently generating about -0.15 per unit of volatility. If you would invest 1,338 in Putnam Global Equity on January 21, 2024 and sell it today you would lose (27.00) from holding Putnam Global Equity or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global E vs. Putnam Global Equity
Performance |
| Timeline |
| Ab Global E |
| Putnam Global Equity |
Ab Global and Putnam Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Putnam Global
The main advantage of trading using opposite Ab Global and Putnam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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 Ab Global E and Putnam Global Equity 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. 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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