Correlation Between Principal Lifetime and Quantitative

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

Diversification Opportunities for Principal Lifetime and Quantitative

0.15

Correlation Coefficient

Principal Lifetime  Quantitative

Average diversification

The 3 months correlation between Principal and Quantitative is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Quantitative Longshort Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantitative Longshort 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 Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantitative Longshort has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Quantitative go up and down completely randomly.

Pair Corralation between Principal Lifetime and Quantitative

Assuming the 90 days horizon Principal Lifetime Hybrid is expected to generate 1.61 times more return on investment than Quantitative. However, Principal Lifetime is 1.61 times more volatile than Quantitative Longshort Equity. It trades about 0.32 of its potential returns per unit of risk. Quantitative Longshort Equity is currently generating about 0.13 per unit of risk. If you would invest  1,651  in Principal Lifetime Hybrid on April 25, 2025 and sell it today you would earn a total of  230.00  from holding Principal Lifetime Hybrid or generate 13.93% return on investment over 90 days.

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

Principal Lifetime Hybrid  vs.  Quantitative Longshort Equity

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 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Principal Lifetime showed solid returns over the last few months and may actually be approaching a breakup point.

Quantitative Longshort

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quantitative Longshort Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Quantitative 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 Quantitative

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

The idea behind Principal Lifetime Hybrid and Quantitative Longshort Equity 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.