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
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Principal is -0.46. 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 generate 0.68 times more return on investment than Principal Lifetime. However, State Street Aggregate is 1.47 times less risky than Principal Lifetime. It trades about 0.17 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.11 per unit of risk. If you would invest 8,822 in State Street Aggregate on September 13, 2024 and sell it today you would earn a total of 85.00 from holding State Street Aggregate or generate 0.96% 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. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Target |
| Principal Lifetime vs. Mutual Of America | Principal Lifetime vs. Palm Valley Capital | Principal Lifetime vs. Victory Rs Partners | Principal Lifetime vs. Lsv Small 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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