Correlation Between Principal Financial and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both Principal Financial and Meiko Electronics 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 Meiko Electronics 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 Meiko Electronics Co, you can compare the effects of market volatilities on Principal Financial and Meiko Electronics 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 Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Financial and Meiko Electronics.
Diversification Opportunities for Principal Financial and Meiko Electronics
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Principal and Meiko is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Principal Financial Group and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of Principal Financial i.e., Principal Financial and Meiko Electronics go up and down completely randomly.
Pair Corralation between Principal Financial and Meiko Electronics
Assuming the 90 days horizon Principal Financial Group is expected to under-perform the Meiko Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Principal Financial Group is 1.21 times less risky than Meiko Electronics. The stock trades about -0.22 of its potential returns per unit of risk. The Meiko Electronics Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,200 in Meiko Electronics Co on September 19, 2024 and sell it today you would earn a total of 450.00 from holding Meiko Electronics Co or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Principal Financial Group vs. Meiko Electronics Co
Performance |
| Timeline |
| Principal Financial |
| Meiko Electronics |
Principal Financial and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Financial and Meiko Electronics
The main advantage of trading using opposite Principal Financial and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Financial position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| Principal Financial vs. Meiko Electronics Co | Principal Financial vs. AOI Electronics Co | Principal Financial vs. Arrow Electronics | Principal Financial vs. Benchmark Electronics |
| Meiko Electronics vs. Benchmark Electronics | Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. SIVERS SEMICONDUCTORS AB | Meiko Electronics vs. Norsk Hydro ASA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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