Correlation Between Principal Financial and AssetMark Financial

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

Diversification Opportunities for Principal Financial and AssetMark Financial

0.25

Correlation Coefficient

Principal Financial  AssetMark Financial

Modest diversification

The 3 months correlation between Principal and AssetMark is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Principal Financial Group and AssetMark Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AssetMark Financial 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 AssetMark Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AssetMark Financial has no effect on the direction of Principal Financial i.e., Principal Financial and AssetMark Financial go up and down completely randomly.

Pair Corralation between Principal Financial and AssetMark Financial

If you would invest (100.00) in AssetMark Financial Holdings on September 29, 2024 and sell it today you would earn a total of  100.00  from holding AssetMark Financial Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Principal Financial Group  vs.  AssetMark Financial Holdings

Principal Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Principal Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AssetMark Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AssetMark Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, AssetMark Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Principal Financial and AssetMark Financial

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

The idea behind Principal Financial Group and AssetMark Financial Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.