Correlation Between Calvert Bond and Principal Lifetime

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

By analyzing existing cross correlation between Calvert Bond Portfolio and Principal Lifetime 2030, you can compare the effects of market volatilities on Calvert Bond 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 Calvert Bond with a short position of Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Bond and Principal Lifetime.

Diversification Opportunities for Calvert Bond and Principal Lifetime

0.92

Correlation Coefficient

Calvert Bond  Principal Lifetime

Almost no diversification

The 3 months correlation between Calvert and Principal is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Bond Portfolio and Principal Lifetime 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime 2030 and Calvert Bond 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 Calvert Bond Portfolio 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 2030 has no effect on the direction of Calvert Bond i.e., Calvert Bond and Principal Lifetime go up and down completely randomly.

Pair Corralation between Calvert Bond and Principal Lifetime

Assuming the 90 days horizon Calvert Bond is expected to generate 1.87 times less return on investment than Principal Lifetime. But when comparing it to its historical volatility, Calvert Bond Portfolio is 1.38 times less risky than Principal Lifetime. It trades about 0.19 of its potential returns per unit of risk. Principal Lifetime 2030 is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,416  in Principal Lifetime 2030 on May 21, 2025 and sell it today you would earn a total of  88.00  from holding Principal Lifetime 2030 or generate 6.21% return on investment over 90 days.

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

Calvert Bond Portfolio  vs.  Principal Lifetime 2030

Calvert Bond Portfolio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Bond Portfolio are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Principal Lifetime 2030

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Lifetime 2030 are ranked lower than 20 (%) 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 Calvert Bond and Principal Lifetime

The main advantage of trading using opposite Calvert Bond and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Bond 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 Calvert Bond Portfolio and Principal Lifetime 2030 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.