Correlation Between Principal Global and Smallcap Growth

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

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

Diversification Opportunities for Principal Global and Smallcap Growth

0.0

Correlation Coefficient

Principal Global  Smallcap Growth

Pay attention - limited upside

The 3 months correlation between Principal and Smallcap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Principal Global Sustainable and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth and Principal Global 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 Global Sustainable are associated (or correlated) with Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Principal Global i.e., Principal Global and Smallcap Growth go up and down completely randomly.

Pair Corralation between Principal Global and Smallcap Growth

If you would invest  1,033  in Principal Global Sustainable on December 30, 2024 and sell it today you would earn a total of  59.00  from holding Principal Global Sustainable or generate 5.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Principal Global Sustainable  vs.  Smallcap Growth Fund

Principal Global Sus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Global Sustainable are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Principal Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smallcap Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Principal Global and Smallcap Growth

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

The idea behind Principal Global Sustainable and Smallcap Growth Fund 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.