Correlation Between CHAMPION IRON and Principal Financial

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

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

Diversification Opportunities for CHAMPION IRON and Principal Financial

0.61

Correlation Coefficient

CHAMPION IRON  Principal Financial

Poor diversification

The 3 months correlation between CHAMPION and Principal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION IRON and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial and CHAMPION IRON 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 CHAMPION IRON 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 CHAMPION IRON i.e., CHAMPION IRON and Principal Financial go up and down completely randomly.

Pair Corralation between CHAMPION IRON and Principal Financial

Assuming the 90 days trading horizon CHAMPION IRON is expected to generate 1.61 times more return on investment than Principal Financial. However, CHAMPION IRON is 1.61 times more volatile than Principal Financial Group. It trades about 0.11 of its potential returns per unit of risk. Principal Financial Group is currently generating about 0.11 per unit of risk. If you would invest  222.00  in CHAMPION IRON on April 22, 2025 and sell it today you would earn a total of  40.00  from holding CHAMPION IRON or generate 18.02% return on investment over 90 days.

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

CHAMPION IRON  vs.  Principal Financial Group

CHAMPION IRON

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHAMPION IRON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHAMPION IRON reported solid returns over the last few months and may actually be approaching a breakup point.

Principal Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Principal Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CHAMPION IRON and Principal Financial

The main advantage of trading using opposite CHAMPION IRON and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAMPION IRON 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 CHAMPION IRON 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.