Correlation Between Principal Lifetime and Global Multi-strategy
Can any of the company-specific risk be diversified away by investing in both Principal Lifetime and Global Multi-strategy 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 Global Multi-strategy 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 Global Multi Strategy Fund, you can compare the effects of market volatilities on Principal Lifetime and Global Multi-strategy 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 Global Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Lifetime and Global Multi-strategy.
Diversification Opportunities for Principal Lifetime and Global Multi-strategy
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Principal and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Principal Lifetime Hybrid and Global Multi Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Multi Strategy 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 Global Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Multi Strategy has no effect on the direction of Principal Lifetime i.e., Principal Lifetime and Global Multi-strategy go up and down completely randomly.
Pair Corralation between Principal Lifetime and Global Multi-strategy
Assuming the 90 days horizon Principal Lifetime Hybrid is expected to generate 2.0 times more return on investment than Global Multi-strategy. However, Principal Lifetime is 2.0 times more volatile than Global Multi Strategy Fund. It trades about 0.35 of its potential returns per unit of risk. Global Multi Strategy Fund is currently generating about 0.42 per unit of risk. If you would invest 1,444 in Principal Lifetime Hybrid on April 3, 2025 and sell it today you would earn a total of 46.00 from holding Principal Lifetime Hybrid or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Principal Lifetime Hybrid vs. Global Multi Strategy Fund
Performance |
| Timeline |
| Principal Lifetime Hybrid |
| Global Multi Strategy |
Principal Lifetime and Global Multi-strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Lifetime and Global Multi-strategy
The main advantage of trading using opposite Principal Lifetime and Global Multi-strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Lifetime position performs unexpectedly, Global Multi-strategy 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 Global Multi-strategy will offset losses from the drop in Global Multi-strategy's long position.| Principal Lifetime vs. American Funds Inflation | Principal Lifetime vs. Vanguard Short Term Inflation Protected | Principal Lifetime vs. Ab Bond Inflation | Principal Lifetime vs. Lord Abbett Inflation |
| Global Multi-strategy vs. Ab Bond Inflation | Global Multi-strategy vs. The Hartford Inflation | Global Multi-strategy vs. American Funds Inflation | Global Multi-strategy vs. Tiaa Cref Inflation Link |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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