Correlation Between Principal Lifetime and Chartwell Small

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

Diversification Opportunities for Principal Lifetime and Chartwell Small

0.64

Correlation Coefficient

Principal Lifetime  Chartwell Small

Poor diversification

The 3 months correlation between PRINCIPAL and Chartwell is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Chartwell Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Small Cap 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 Chartwell Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Small Cap has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Chartwell Small go up and down completely randomly.

Pair Corralation between Principal Lifetime and Chartwell Small

Assuming the 90 days horizon Principal Lifetime Hybrid is expected to generate 0.34 times more return on investment than Chartwell Small. However, Principal Lifetime Hybrid is 2.9 times less risky than Chartwell Small. It trades about 0.21 of its potential returns per unit of risk. Chartwell Small Cap is currently generating about 0.06 per unit of risk. If you would invest  1,455  in Principal Lifetime Hybrid on May 19, 2025 and sell it today you would earn a total of  89.00  from holding Principal Lifetime Hybrid or generate 6.12% 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.  Chartwell Small Cap

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 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Principal Lifetime is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chartwell Small Cap

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Small Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Chartwell Small 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 Chartwell Small

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

The idea behind Principal Lifetime Hybrid and Chartwell Small Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.