Correlation Between Carlyle and Putnam Master

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

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

Diversification Opportunities for Carlyle and Putnam Master

-0.6

Correlation Coefficient

Carlyle  Putnam Master

Excellent diversification

The 3 months correlation between Carlyle and Putnam is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Putnam Master Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Master Interm and Carlyle 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 Carlyle Group are associated (or correlated) with Putnam Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Master Interm has no effect on the direction of Carlyle i.e., Carlyle and Putnam Master go up and down completely randomly.

Pair Corralation between Carlyle and Putnam Master

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 2.28 times more return on investment than Putnam Master. However, Carlyle is 2.28 times more volatile than Putnam Master Intermediate. It trades about 0.07 of its potential returns per unit of risk. Putnam Master Intermediate is currently generating about 0.04 per unit of risk. If you would invest  2,768  in Carlyle Group on September 13, 2024 and sell it today you would earn a total of  2,713  from holding Carlyle Group or generate 98.01% return on investment over 90 days.

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

Carlyle Group  vs.  Putnam Master Intermediate

Carlyle Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Putnam Master Interm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Master Intermediate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Putnam Master is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Carlyle and Putnam Master

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

The idea behind Carlyle Group and Putnam Master Intermediate 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.