Correlation Between Spire Global and Putnam Global

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

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

Diversification Opportunities for Spire Global and Putnam Global

0.68

Correlation Coefficient

Spire Global  Putnam Global

Poor diversification

The 3 months correlation between Spire and Putnam is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Putnam Global Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Global Industrials and Spire 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 Spire Global are associated (or correlated) with Putnam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Global Industrials has no effect on the direction of Spire Global i.e., Spire Global and Putnam Global go up and down completely randomly.

Pair Corralation between Spire Global and Putnam Global

Given the investment horizon of 90 days Spire Global is expected to generate 7.49 times more return on investment than Putnam Global. However, Spire Global is 7.49 times more volatile than Putnam Global Industrials. It trades about 0.08 of its potential returns per unit of risk. Putnam Global Industrials is currently generating about 0.15 per unit of risk. If you would invest  680.00  in Spire Global on September 4, 2024 and sell it today you would earn a total of  797.00  from holding Spire Global or generate 117.21% return on investment over 90 days.

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

Spire Global  vs.  Putnam Global Industrials

Spire Global

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Putnam Global Industrials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Global Industrials are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Putnam Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Spire Global and Putnam Global

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

The idea behind Spire Global and Putnam Global Industrials 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.