Correlation Between Principal Financial and Federal Life
Can any of the company-specific risk be diversified away by investing in both Principal Financial and Federal Life 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 Financial and Federal Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Principal Financial Group and Federal Life Group, you can compare the effects of market volatilities on Principal Financial and Federal Life 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 Financial with a short position of Federal Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Financial and Federal Life.
Diversification Opportunities for Principal Financial and Federal Life
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Principal and Federal is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Principal Financial Group and Federal Life Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Life Group and Principal 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 Principal Financial Group are associated (or correlated) with Federal Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Life Group has no effect on the direction of Principal Financial i.e., Principal Financial and Federal Life go up and down completely randomly.
Pair Corralation between Principal Financial and Federal Life
If you would invest 1,082 in Federal Life Group on January 26, 2024 and sell it today you would earn a total of 0.00 from holding Federal Life Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Principal Financial Group vs. Federal Life Group
Performance |
| Timeline |
| Principal Financial |
| Federal Life Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Principal Financial and Federal Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Financial and Federal Life
The main advantage of trading using opposite Principal Financial and Federal Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Financial position performs unexpectedly, Federal Life 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 Federal Life will offset losses from the drop in Federal Life's long position.| Principal Financial vs. State Street Corp | Principal Financial vs. Bank of New | Principal Financial vs. SEI Investments | Principal Financial vs. Affiliated Managers Group |
| Federal Life vs. American Equity Investment | Federal Life vs. American Equity Investment | Federal Life vs. American Equity Investment | Federal Life vs. AIA Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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