Correlation Between Ancora Microcap and Praxis International
Can any of the company-specific risk be diversified away by investing in both Ancora Microcap and Praxis International 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 Ancora Microcap and Praxis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ancora Microcap Fund and Praxis International Index, you can compare the effects of market volatilities on Ancora Microcap and Praxis International 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 Ancora Microcap with a short position of Praxis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ancora Microcap and Praxis International.
Diversification Opportunities for Ancora Microcap and Praxis International
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ancora and Praxis is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ancora Microcap Fund and Praxis International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis International and Ancora Microcap 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 Ancora Microcap Fund are associated (or correlated) with Praxis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis International has no effect on the direction of Ancora Microcap i.e., Ancora Microcap and Praxis International go up and down completely randomly.
Pair Corralation between Ancora Microcap and Praxis International
Assuming the 90 days horizon Ancora Microcap Fund is expected to generate 1.28 times more return on investment than Praxis International. However, Ancora Microcap is 1.28 times more volatile than Praxis International Index. It trades about 0.05 of its potential returns per unit of risk. Praxis International Index is currently generating about 0.06 per unit of risk. If you would invest 1,389 in Ancora Microcap Fund on September 2, 2024 and sell it today you would earn a total of 398.00 from holding Ancora Microcap Fund or generate 28.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ancora Microcap Fund vs. Praxis International Index
Performance |
| Timeline |
| Ancora Microcap |
| Praxis International |
Ancora Microcap and Praxis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ancora Microcap and Praxis International
The main advantage of trading using opposite Ancora Microcap and Praxis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ancora Microcap position performs unexpectedly, Praxis International 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 Praxis International will offset losses from the drop in Praxis International's long position.The idea behind Ancora Microcap Fund and Praxis International Index 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.
| Praxis International vs. Praxis Growth Index | Praxis International vs. Praxis Small Cap | Praxis International vs. Praxis Small Cap | Praxis International vs. Praxis Genesis Balanced |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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