Correlation Between Putnam Global and Schwab Health

Can any of the company-specific risk be diversified away by investing in both Putnam Global and Schwab Health 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 Putnam Global and Schwab Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Putnam Global Health and Schwab Health Care, you can compare the effects of market volatilities on Putnam Global and Schwab Health 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 Putnam Global with a short position of Schwab Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Schwab Health.

Diversification Opportunities for Putnam Global and Schwab Health

0.95

Correlation Coefficient

Putnam Global  Schwab Health

Almost no diversification

The 3 months correlation between Putnam and Schwab is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Health and Schwab Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Health Care and Putnam 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 Putnam Global Health are associated (or correlated) with Schwab Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Health Care has no effect on the direction of Putnam Global i.e., Putnam Global and Schwab Health go up and down completely randomly.

Pair Corralation between Putnam Global and Schwab Health

Assuming the 90 days horizon Putnam Global Health is expected to under-perform the Schwab Health. But the mutual fund apears to be less risky and, when comparing its historical volatility, Putnam Global Health is 1.02 times less risky than Schwab Health. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Schwab Health Care is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,331  in Schwab Health Care on May 7, 2025 and sell it today you would lose (17.00) from holding Schwab Health Care or give up 0.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Putnam Global Health  vs.  Schwab Health Care

Putnam Global Health

Risk-Adjusted Performance

Weakest

Over the last 90 days Putnam Global Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnam Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Schwab Health Care

Risk-Adjusted Performance

Weakest

Over the last 90 days Schwab Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Schwab Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Putnam Global and Schwab Health

The main advantage of trading using opposite Putnam Global and Schwab Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Global position performs unexpectedly, Schwab Health 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 Schwab Health will offset losses from the drop in Schwab Health's long position.

The idea behind Putnam Global Health and Schwab Health Care 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.