Correlation Between Principal Lifetime and Western Asset
Can any of the company-specific risk be diversified away by investing in both Principal Lifetime and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Principal Lifetime and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Western Asset.
Diversification Opportunities for Principal Lifetime and Western Asset
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PRINCIPAL and Western is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Western Asset go up and down completely randomly.
Pair Corralation between Principal Lifetime and Western Asset
Assuming the 90 days horizon Principal Lifetime Hybrid is expected to generate 1.99 times more return on investment than Western Asset. However, Principal Lifetime is 1.99 times more volatile than Western Asset Inflation. It trades about 0.07 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.02 per unit of risk. If you would invest 1,402 in Principal Lifetime Hybrid on September 3, 2024 and sell it today you would earn a total of 408.00 from holding Principal Lifetime Hybrid or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Principal Lifetime Hybrid vs. Western Asset Inflation
Performance |
| Timeline |
| Principal Lifetime Hybrid |
| Western Asset Inflation |
Principal Lifetime and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Lifetime and Western Asset
The main advantage of trading using opposite Principal Lifetime and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Lifetime position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Principal Lifetime vs. American Funds 2060 | Principal Lifetime vs. American Funds 2060 | Principal Lifetime vs. American Funds 2060 | Principal Lifetime vs. T Rowe Price |
| Western Asset vs. Blackrock Sm Cap | Western Asset vs. Principal Lifetime Hybrid | Western Asset vs. Adams Diversified Equity | Western Asset vs. Lord Abbett Diversified |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |