Correlation Between Principal Lifetime and Loomis Sayles
Can any of the company-specific risk be diversified away by investing in both Principal Lifetime and Loomis Sayles 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 Loomis Sayles 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 Loomis Sayles Small, you can compare the effects of market volatilities on Principal Lifetime and Loomis Sayles 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 Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Loomis Sayles.
Diversification Opportunities for Principal Lifetime and Loomis Sayles
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PRINCIPAL and Loomis is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Loomis Sayles Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Small 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Small has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Loomis Sayles go up and down completely randomly.
Pair Corralation between Principal Lifetime and Loomis Sayles
Assuming the 90 days horizon Principal Lifetime is expected to generate 2.52 times less return on investment than Loomis Sayles. But when comparing it to its historical volatility, Principal Lifetime Hybrid is 2.54 times less risky than Loomis Sayles. It trades about 0.31 of its potential returns per unit of risk. Loomis Sayles Small is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,090 in Loomis Sayles Small on September 4, 2024 and sell it today you would earn a total of 223.00 from holding Loomis Sayles Small or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Principal Lifetime Hybrid vs. Loomis Sayles Small
Performance |
| Timeline |
| Principal Lifetime Hybrid |
| Loomis Sayles Small |
Principal Lifetime and Loomis Sayles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Lifetime and Loomis Sayles
The main advantage of trading using opposite Principal Lifetime and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Lifetime position performs unexpectedly, Loomis Sayles 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 Loomis Sayles will offset losses from the drop in Loomis Sayles' long position.| Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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