Correlation Between Principal Lifetime and Mainstay Short
Can any of the company-specific risk be diversified away by investing in both Principal Lifetime and Mainstay Short 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 Lifetime and Mainstay Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Principal Lifetime Hybrid and Mainstay Short Duration, you can compare the effects of market volatilities on Principal Lifetime and Mainstay Short 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 Lifetime with a short position of Mainstay Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Mainstay Short.
Diversification Opportunities for Principal Lifetime and Mainstay Short
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PRINCIPAL and Mainstay is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Mainstay Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Short Duration and Principal Lifetime 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 Lifetime Hybrid are associated (or correlated) with Mainstay Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Short Duration has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Mainstay Short go up and down completely randomly.
Pair Corralation between Principal Lifetime and Mainstay Short
Assuming the 90 days horizon Principal Lifetime Hybrid is expected to generate 2.55 times more return on investment than Mainstay Short. However, Principal Lifetime is 2.55 times more volatile than Mainstay Short Duration. It trades about 0.31 of its potential returns per unit of risk. Mainstay Short Duration is currently generating about 0.08 per unit of risk. If you would invest 1,054 in Principal Lifetime Hybrid on September 1, 2024 and sell it today you would earn a total of 21.00 from holding Principal Lifetime Hybrid or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Principal Lifetime Hybrid vs. Mainstay Short Duration
Performance |
| Timeline |
| Principal Lifetime Hybrid |
| Mainstay Short Duration |
Principal Lifetime and Mainstay Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Lifetime and Mainstay Short
The main advantage of trading using opposite Principal Lifetime and Mainstay Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Lifetime position performs unexpectedly, Mainstay Short 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 Mainstay Short will offset losses from the drop in Mainstay Short's long position.| Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. International Equity Index | Principal Lifetime vs. Strategic Asset Management |
| Mainstay Short vs. T Rowe Price | Mainstay Short vs. Old Westbury Large | Mainstay Short vs. Principal Lifetime Hybrid | Mainstay Short vs. Qs Large Cap |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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