Correlation Between Floating Rate and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both Floating Rate and Principal Lifetime 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 Floating Rate and Principal Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Principal Lifetime Hybrid, you can compare the effects of market volatilities on Floating Rate and Principal Lifetime 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 Floating Rate with a short position of Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Principal Lifetime.
Diversification Opportunities for Floating Rate and Principal Lifetime
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Floating and Principal is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid and Floating Rate 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 Floating Rate Fund are associated (or correlated) with Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Floating Rate i.e., Floating Rate and Principal Lifetime go up and down completely randomly.
Pair Corralation between Floating Rate and Principal Lifetime
Assuming the 90 days horizon Floating Rate Fund is not expected to generate positive returns. However, Floating Rate Fund is 7.56 times less risky than Principal Lifetime. It waists most of its returns potential to compensate for thr risk taken. Principal Lifetime is generating about 0.16 per unit of risk. If you would invest 1,322 in Principal Lifetime Hybrid on November 4, 2024 and sell it today you would earn a total of 22.00 from holding Principal Lifetime Hybrid or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floating Rate Fund vs. Principal Lifetime Hybrid
Performance |
| Timeline |
| Floating Rate |
| Principal Lifetime Hybrid |
Floating Rate and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Principal Lifetime
The main advantage of trading using opposite Floating Rate and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime's long position.| Floating Rate vs. Prudential Financial Services | Floating Rate vs. Fidelity Advisor Financial | Floating Rate vs. Schwab Government Money | Floating Rate vs. Blackstone Secured Lending |
| Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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