Correlation Between Principal Financial and Assicurazioni Generali

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

Diversification Opportunities for Principal Financial and Assicurazioni Generali

0.83

Correlation Coefficient

Principal Financial  Assicurazioni Generali

Very poor diversification

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

Pair Corralation between Principal Financial and Assicurazioni Generali

Considering the 90-day investment horizon Principal Financial is expected to generate 1.52 times less return on investment than Assicurazioni Generali. In addition to that, Principal Financial is 1.16 times more volatile than Assicurazioni Generali SpA. It trades about 0.04 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.06 per unit of volatility. If you would invest  826.00  in Assicurazioni Generali SpA on January 26, 2024 and sell it today you would earn a total of  405.00  from holding Assicurazioni Generali SpA or generate 49.03% return on investment over 90 days.

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

Principal Financial Group  vs.  Assicurazioni Generali SpA

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.

Assicurazioni Generali

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 15 (%) 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.

Pair Trading with Principal Financial and Assicurazioni Generali

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

The idea behind Principal Financial Group and Assicurazioni Generali SpA 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.