Correlation Between Principal and Capital Group

Can any of the company-specific risk be diversified away by investing in both Principal and Capital Group 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 and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Principal and Capital Group Global, you can compare the effects of market volatilities on Principal and Capital Group 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 with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal and Capital Group.

Diversification Opportunities for Principal and Capital Group

-0.35

Correlation Coefficient

Principal  Capital Group

Very good diversification

The 3 months correlation between Principal and Capital is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Principal and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global and Principal 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 are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of Principal i.e., Principal and Capital Group go up and down completely randomly.

Pair Corralation between Principal and Capital Group

If you would invest  4,404  in Principal on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Principal or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

Principal  vs.  Capital Group Global

Principal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Principal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Principal is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Capital Group Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Group Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Capital Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Principal and Capital Group

The main advantage of trading using opposite Principal and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.

The idea behind Principal and Capital Group Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.