Correlation Between Mastercard and Putnam Premier

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

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

Diversification Opportunities for Mastercard and Putnam Premier

-0.72

Correlation Coefficient

Mastercard  Putnam Premier

Pay attention - limited upside

The 3 months correlation between Mastercard and Putnam is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Putnam Premier Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Premier Income and Mastercard 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 Mastercard are associated (or correlated) with Putnam Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Premier Income has no effect on the direction of Mastercard i.e., Mastercard and Putnam Premier go up and down completely randomly.

Pair Corralation between Mastercard and Putnam Premier

Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.64 times more return on investment than Putnam Premier. However, Mastercard is 1.64 times more volatile than Putnam Premier Income. It trades about 0.16 of its potential returns per unit of risk. Putnam Premier Income is currently generating about -0.07 per unit of risk. If you would invest  48,250  in Mastercard on September 4, 2024 and sell it today you would earn a total of  4,886  from holding Mastercard or generate 10.13% return on investment over 90 days.

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

Mastercard  vs.  Putnam Premier Income

Mastercard

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Putnam Premier Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Premier Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Putnam Premier is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mastercard and Putnam Premier

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

The idea behind Mastercard and Putnam Premier Income 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.