Correlation Between Principal Lifetime and Calvert Ultra-short

Can any of the company-specific risk be diversified away by investing in both Principal Lifetime and Calvert Ultra-short 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 Calvert Ultra-short 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 Calvert Ultra Short Income, you can compare the effects of market volatilities on Principal Lifetime and Calvert Ultra-short 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 Calvert Ultra-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Calvert Ultra-short.

Diversification Opportunities for Principal Lifetime and Calvert Ultra-short

0.72

Correlation Coefficient

Principal Lifetime  Calvert Ultra-short

Poor diversification

The 3 months correlation between Principal and Calvert is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Calvert Ultra Short Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Ultra Short 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 Calvert Ultra-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Ultra Short has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Calvert Ultra-short go up and down completely randomly.

Pair Corralation between Principal Lifetime and Calvert Ultra-short

Assuming the 90 days horizon Principal Lifetime Hybrid is expected to generate 5.62 times more return on investment than Calvert Ultra-short. However, Principal Lifetime is 5.62 times more volatile than Calvert Ultra Short Income. It trades about 0.23 of its potential returns per unit of risk. Calvert Ultra Short Income is currently generating about 0.2 per unit of risk. If you would invest  1,741  in Principal Lifetime Hybrid on May 26, 2025 and sell it today you would earn a total of  150.00  from holding Principal Lifetime Hybrid or generate 8.62% return on investment over 90 days.

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

Principal Lifetime Hybrid  vs.  Calvert Ultra Short Income

Principal Lifetime Hybrid

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Lifetime Hybrid are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Principal Lifetime may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Calvert Ultra Short

Risk-Adjusted Performance

Good

Over the last 90 days Calvert Ultra Short Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Calvert Ultra-short 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 Lifetime and Calvert Ultra-short

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

The idea behind Principal Lifetime Hybrid and Calvert Ultra Short Income 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.