Correlation Between State Street and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both State Street and Principal Lifetime 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 State Street and Principal Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Aggregate and Principal Lifetime Hybrid, you can compare the effects of market volatilities on State Street and Principal Lifetime 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 State Street with a short position of Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Principal Lifetime.
Diversification Opportunities for State Street and Principal Lifetime
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Principal is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding State Street Aggregate and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid and State Street 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 State Street Aggregate are associated (or correlated) with Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of State Street i.e., State Street and Principal Lifetime go up and down completely randomly.
Pair Corralation between State Street and Principal Lifetime
Assuming the 90 days horizon State Street Aggregate is expected to under-perform the Principal Lifetime. But the mutual fund apears to be less risky and, when comparing its historical volatility, State Street Aggregate is 1.92 times less risky than Principal Lifetime. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Principal Lifetime Hybrid is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,720 in Principal Lifetime Hybrid on September 12, 2024 and sell it today you would earn a total of 99.00 from holding Principal Lifetime Hybrid or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Aggregate vs. Principal Lifetime Hybrid
Performance |
| Timeline |
| State Street Aggregate |
| Principal Lifetime Hybrid |
State Street and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Principal Lifetime
The main advantage of trading using opposite State Street and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime's long position.| State Street vs. SCOR PK | State Street vs. Morningstar Unconstrained Allocation | State Street vs. Via Renewables | State Street vs. Bondbloxx ETF Trust |
| Principal Lifetime vs. Scharf Global Opportunity | Principal Lifetime vs. Arrow Managed Futures | Principal Lifetime vs. T Rowe Price | Principal Lifetime vs. Volumetric Fund Volumetric |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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