Correlation Between Trade Desk and Principal Financial

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

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

Diversification Opportunities for Trade Desk and Principal Financial

0.38

Correlation Coefficient

Trade Desk  Principal Financial

Weak diversification

The 3 months correlation between Trade and Principal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and Principal Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial and Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and Principal Financial go up and down completely randomly.

Pair Corralation between Trade Desk and Principal Financial

Assuming the 90 days trading horizon The Trade Desk is expected to generate 31.51 times more return on investment than Principal Financial. However, Trade Desk is 31.51 times more volatile than Principal Financial Group,. It trades about 0.23 of its potential returns per unit of risk. Principal Financial Group, is currently generating about 0.13 per unit of risk. If you would invest  279.00  in The Trade Desk on April 20, 2025 and sell it today you would earn a total of  171.00  from holding The Trade Desk or generate 61.29% return on investment over 90 days.

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

The Trade Desk  vs.  Principal Financial Group,

Trade Desk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Trade Desk sustained 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 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Principal Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Trade Desk and Principal Financial

The main advantage of trading using opposite Trade Desk and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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 The Trade Desk 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.