Correlation Between Stifel Financial and Principal Real

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

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

Diversification Opportunities for Stifel Financial and Principal Real

-0.47

Correlation Coefficient

Stifel Financial  Principal Real

Very good diversification

The 3 months correlation between Stifel and Principal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and Principal Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Real Estate and Stifel Financial 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 Stifel Financial are associated (or correlated) with Principal Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Real Estate has no effect on the direction of Stifel Financial i.e., Stifel Financial and Principal Real go up and down completely randomly.

Pair Corralation between Stifel Financial and Principal Real

Allowing for the 90-day total investment horizon Stifel Financial is expected to under-perform the Principal Real. In addition to that, Stifel Financial is 2.95 times more volatile than Principal Real Estate. It trades about -0.06 of its total potential returns per unit of risk. Principal Real Estate is currently generating about 0.24 per unit of volatility. If you would invest  945.00  in Principal Real Estate on December 28, 2024 and sell it today you would earn a total of  94.00  from holding Principal Real Estate or generate 9.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stifel Financial  vs.  Principal Real Estate

Stifel Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Principal Real Estate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Real Estate are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Principal Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Stifel Financial and Principal Real

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

The idea behind Stifel Financial and Principal Real Estate 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.