Correlation Between Lgm Risk and Principal Lifetime

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

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

Diversification Opportunities for Lgm Risk and Principal Lifetime

0.66

Correlation Coefficient

Lgm Risk  Principal Lifetime

Poor diversification

The 3 months correlation between Lgm and Principal is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed 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 Lgm Risk 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 Lgm Risk Managed 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 Lgm Risk i.e., Lgm Risk and Principal Lifetime go up and down completely randomly.

Pair Corralation between Lgm Risk and Principal Lifetime

Assuming the 90 days horizon Lgm Risk Managed is expected to generate 0.67 times more return on investment than Principal Lifetime. However, Lgm Risk Managed is 1.49 times less risky than Principal Lifetime. It trades about 0.13 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.07 per unit of risk. If you would invest  941.00  in Lgm Risk Managed on October 24, 2024 and sell it today you would earn a total of  201.00  from holding Lgm Risk Managed or generate 21.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lgm Risk Managed  vs.  Principal Lifetime Hybrid

Lgm Risk Managed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lgm Risk Managed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lgm Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Principal Lifetime Hybrid

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Lifetime Hybrid are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Principal Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lgm Risk and Principal Lifetime

The main advantage of trading using opposite Lgm Risk and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lgm Risk 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.

The idea behind Lgm Risk Managed and Principal Lifetime Hybrid 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.