Correlation Between Ab Select and Praxis Small
Can any of the company-specific risk be diversified away by investing in both Ab Select and Praxis Small 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 Ab Select and Praxis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Select Equity and Praxis Small Cap, you can compare the effects of market volatilities on Ab Select and Praxis Small 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 Ab Select with a short position of Praxis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Praxis Small.
Diversification Opportunities for Ab Select and Praxis Small
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AUUIX and PRAXIS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and Praxis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Small Cap and Ab Select 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 Ab Select Equity are associated (or correlated) with Praxis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Small Cap has no effect on the direction of Ab Select i.e., Ab Select and Praxis Small go up and down completely randomly.
Pair Corralation between Ab Select and Praxis Small
Assuming the 90 days horizon Ab Select Equity is expected to under-perform the Praxis Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Select Equity is 1.06 times less risky than Praxis Small. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Praxis Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,075 in Praxis Small Cap on October 26, 2024 and sell it today you would earn a total of 43.00 from holding Praxis Small Cap or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Select Equity vs. Praxis Small Cap
Performance |
| Timeline |
| Ab Select Equity |
| Praxis Small Cap |
Ab Select and Praxis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Select and Praxis Small
The main advantage of trading using opposite Ab Select and Praxis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select position performs unexpectedly, Praxis Small 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 Small will offset losses from the drop in Praxis Small's long position.| Ab Select vs. Aig Government Money | Ab Select vs. Ridgeworth Seix Government | Ab Select vs. Intermediate Government Bond | Ab Select vs. Sit Government Securities |
| Praxis Small vs. Angel Oak Financial | Praxis Small vs. Putnam Global Financials | Praxis Small vs. Davis Financial Fund | Praxis Small vs. Gabelli Global Financial |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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