Correlation Between Calvert Developed and Putnam U

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

By analyzing existing cross correlation between Calvert Developed Market and Putnam U S, you can compare the effects of market volatilities on Calvert Developed and Putnam U 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 Calvert Developed with a short position of Putnam U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Developed and Putnam U.

Diversification Opportunities for Calvert Developed and Putnam U

0.65

Correlation Coefficient

Calvert Developed  Putnam U

Poor diversification

The 3 months correlation between Calvert and Putnam is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Developed Market and Putnam U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam U S and Calvert Developed 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 Calvert Developed Market are associated (or correlated) with Putnam U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam U S has no effect on the direction of Calvert Developed i.e., Calvert Developed and Putnam U go up and down completely randomly.

Pair Corralation between Calvert Developed and Putnam U

Assuming the 90 days horizon Calvert Developed Market is expected to generate 2.31 times more return on investment than Putnam U. However, Calvert Developed is 2.31 times more volatile than Putnam U S. It trades about -0.01 of its potential returns per unit of risk. Putnam U S is currently generating about -0.05 per unit of risk. If you would invest  3,159  in Calvert Developed Market on September 4, 2024 and sell it today you would lose (22.00) from holding Calvert Developed Market or give up 0.7% of portfolio value over 90 days.

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

Calvert Developed Market  vs.  Putnam U S

Calvert Developed Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Putnam U S

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Calvert Developed and Putnam U

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

The idea behind Calvert Developed Market and Putnam U S 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.