Correlation Between Assicurazioni Generali and Principal Financial

Can any of the company-specific risk be diversified away by investing in both Assicurazioni Generali and Principal Financial 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 Assicurazioni Generali and Principal Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Assicurazioni Generali SpA and Principal Financial Group, you can compare the effects of market volatilities on Assicurazioni Generali and Principal Financial 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 Assicurazioni Generali with a short position of Principal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assicurazioni Generali and Principal Financial.

Diversification Opportunities for Assicurazioni Generali and Principal Financial

0.83

Correlation Coefficient

Assicurazioni Generali  Principal Financial

Very poor diversification

The 3 months correlation between Assicurazioni and Principal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Assicurazioni Generali SpA and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial and Assicurazioni Generali 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 Assicurazioni Generali SpA are associated (or correlated) with Principal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Financial has no effect on the direction of Assicurazioni Generali i.e., Assicurazioni Generali and Principal Financial go up and down completely randomly.

Pair Corralation between Assicurazioni Generali and Principal Financial

Assuming the 90 days horizon Assicurazioni Generali SpA is expected to generate 0.92 times more return on investment than Principal Financial. However, Assicurazioni Generali SpA is 1.09 times less risky than Principal Financial. It trades about -0.13 of its potential returns per unit of risk. Principal Financial Group is currently generating about -0.16 per unit of risk. If you would invest  1,270  in Assicurazioni Generali SpA on January 24, 2024 and sell it today you would lose (35.00) from holding Assicurazioni Generali SpA or give up 2.76% of portfolio value over 90 days.

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

Assicurazioni Generali SpA  vs.  Principal Financial Group

Assicurazioni Generali

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Assicurazioni Generali may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Principal Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Principal Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Assicurazioni Generali and Principal Financial

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

The idea behind Assicurazioni Generali SpA and Principal Financial Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.