Correlation Between Putnam Global and Blackrock Health

Can any of the company-specific risk be diversified away by investing in both Putnam Global and Blackrock 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 Blackrock 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 Blackrock Health Sciences, you can compare the effects of market volatilities on Putnam Global and Blackrock 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 Blackrock Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Global and Blackrock Health.

Diversification Opportunities for Putnam Global and Blackrock Health

0.9

Correlation Coefficient

Putnam Global  Blackrock Health

Almost no diversification

The 3 months correlation between Putnam and Blackrock is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Global Health and Blackrock Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Health Sciences 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 Blackrock Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Health Sciences has no effect on the direction of Putnam Global i.e., Putnam Global and Blackrock Health go up and down completely randomly.

Pair Corralation between Putnam Global and Blackrock Health

Assuming the 90 days horizon Putnam Global Health is expected to under-perform the Blackrock Health. But the mutual fund apears to be less risky and, when comparing its historical volatility, Putnam Global Health is 1.54 times less risky than Blackrock Health. The mutual fund trades about -0.3 of its potential returns per unit of risk. The Blackrock Health Sciences is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  6,887  in Blackrock Health Sciences on September 25, 2024 and sell it today you would lose (798.00) from holding Blackrock Health Sciences or give up 11.59% 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.  Blackrock Health Sciences

Putnam Global Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Global Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Putnam Global and Blackrock Health

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

The idea behind Putnam Global Health and Blackrock Health Sciences 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.