Correlation Between Principal Lifetime and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both Principal Lifetime and Mainstay Moderate 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 Lifetime and Mainstay Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Principal Lifetime Hybrid and Mainstay Moderate Allocation, you can compare the effects of market volatilities on Principal Lifetime and Mainstay Moderate 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 Lifetime with a short position of Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Mainstay Moderate.
Diversification Opportunities for Principal Lifetime and Mainstay Moderate
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Principal and Mainstay is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate and Principal Lifetime 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 Lifetime Hybrid are associated (or correlated) with Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Mainstay Moderate go up and down completely randomly.
Pair Corralation between Principal Lifetime and Mainstay Moderate
Assuming the 90 days horizon Principal Lifetime Hybrid is expected to generate 1.0 times more return on investment than Mainstay Moderate. However, Principal Lifetime Hybrid is 1.0 times less risky than Mainstay Moderate. It trades about -0.03 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about -0.05 per unit of risk. If you would invest 1,495 in Principal Lifetime Hybrid on December 24, 2024 and sell it today you would lose (19.00) from holding Principal Lifetime Hybrid or give up 1.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 65.0% |
Values | Daily Returns |
Principal Lifetime Hybrid vs. Mainstay Moderate Allocation
Performance |
Timeline |
Principal Lifetime Hybrid |
Mainstay Moderate |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Principal Lifetime and Mainstay Moderate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Principal Lifetime and Mainstay Moderate
The main advantage of trading using opposite Principal Lifetime and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Lifetime position performs unexpectedly, Mainstay Moderate 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 Mainstay Moderate will offset losses from the drop in Mainstay Moderate's long position.Principal Lifetime vs. Global Gold Fund | Principal Lifetime vs. Franklin Gold Precious | Principal Lifetime vs. Global Gold Fund | Principal Lifetime vs. Gold And Precious |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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