Correlation Between IShares 0 and Putnam ETF

Can any of the company-specific risk be diversified away by investing in both IShares 0 and Putnam ETF 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 IShares 0 and Putnam ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 0 5 Year and Putnam ETF Trust, you can compare the effects of market volatilities on IShares 0 and Putnam ETF 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 IShares 0 with a short position of Putnam ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 0 and Putnam ETF.

Diversification Opportunities for IShares 0 and Putnam ETF

0.52

Correlation Coefficient

IShares 0  Putnam ETF

Very weak diversification

The 3 months correlation between IShares and Putnam is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares 0 5 Year and Putnam ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam ETF Trust and IShares 0 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 iShares 0 5 Year are associated (or correlated) with Putnam ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam ETF Trust has no effect on the direction of IShares 0 i.e., IShares 0 and Putnam ETF go up and down completely randomly.

Pair Corralation between IShares 0 and Putnam ETF

Given the investment horizon of 90 days iShares 0 5 Year is expected to generate 0.94 times more return on investment than Putnam ETF. However, iShares 0 5 Year is 1.06 times less risky than Putnam ETF. It trades about 0.19 of its potential returns per unit of risk. Putnam ETF Trust is currently generating about 0.06 per unit of risk. If you would invest  4,231  in iShares 0 5 Year on August 30, 2024 and sell it today you would earn a total of  89.00  from holding iShares 0 5 Year or generate 2.1% return on investment over 90 days.

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

iShares 0 5 Year  vs.  Putnam ETF Trust

iShares 0 5

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 0 5 Year are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IShares 0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Putnam ETF Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Putnam ETF is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares 0 and Putnam ETF

The main advantage of trading using opposite IShares 0 and Putnam ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 0 position performs unexpectedly, Putnam ETF 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 ETF will offset losses from the drop in Putnam ETF's long position.

The idea behind iShares 0 5 Year and Putnam ETF Trust 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.