Correlation Between Principal Financial and Federated Investors
Can any of the company-specific risk be diversified away by investing in both Principal Financial and Federated Investors 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 Principal Financial and Federated Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Principal Financial Group and Federated Investors B, you can compare the effects of market volatilities on Principal Financial and Federated Investors 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 Principal Financial with a short position of Federated Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Financial and Federated Investors.
Diversification Opportunities for Principal Financial and Federated Investors
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Principal and Federated is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Principal Financial Group and Federated Investors B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Investors and Principal Financial 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 Principal Financial Group are associated (or correlated) with Federated Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Investors has no effect on the direction of Principal Financial i.e., Principal Financial and Federated Investors go up and down completely randomly.
Pair Corralation between Principal Financial and Federated Investors
Considering the 90-day investment horizon Principal Financial is expected to generate 2.01 times less return on investment than Federated Investors. In addition to that, Principal Financial is 1.13 times more volatile than Federated Investors B. It trades about 0.11 of its total potential returns per unit of risk. Federated Investors B is currently generating about 0.26 per unit of volatility. If you would invest 4,000 in Federated Investors B on August 31, 2024 and sell it today you would earn a total of 284.00 from holding Federated Investors B or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Principal Financial Group vs. Federated Investors B
Performance |
| Timeline |
| Principal Financial |
| Federated Investors |
Principal Financial and Federated Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Financial and Federated Investors
The main advantage of trading using opposite Principal Financial and Federated Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Financial position performs unexpectedly, Federated Investors 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 Federated Investors will offset losses from the drop in Federated Investors' long position.| Principal Financial vs. State Street Corp | Principal Financial vs. Bank of New | Principal Financial vs. SEI Investments | Principal Financial vs. Affiliated Managers Group |
| Federated Investors vs. Federated Premier Municipal | Federated Investors vs. Blackrock Muniyield | Federated Investors vs. Diamond Hill Investment | Federated Investors vs. NXG NextGen Infrastructure |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |