Correlation Between Praxis Growth and State Street
Can any of the company-specific risk be diversified away by investing in both Praxis Growth and State Street 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 Praxis Growth and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Praxis Growth Index and State Street Premier, you can compare the effects of market volatilities on Praxis Growth and State Street 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 Praxis Growth with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Growth and State Street.
Diversification Opportunities for Praxis Growth and State Street
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Praxis and State is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Growth Index and State Street Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Premier and Praxis Growth 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 Praxis Growth Index are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Premier has no effect on the direction of Praxis Growth i.e., Praxis Growth and State Street go up and down completely randomly.
Pair Corralation between Praxis Growth and State Street
Assuming the 90 days horizon Praxis Growth Index is expected to generate 0.95 times more return on investment than State Street. However, Praxis Growth Index is 1.06 times less risky than State Street. It trades about 0.13 of its potential returns per unit of risk. State Street Premier is currently generating about 0.11 per unit of risk. If you would invest 3,646 in Praxis Growth Index on September 14, 2024 and sell it today you would earn a total of 1,487 from holding Praxis Growth Index or generate 40.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Praxis Growth Index vs. State Street Premier
Performance |
| Timeline |
| Praxis Growth Index |
| State Street Premier |
Praxis Growth and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Praxis Growth and State Street
The main advantage of trading using opposite Praxis Growth and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Growth position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Praxis Growth vs. T Rowe Price | Praxis Growth vs. Western Asset Diversified | Praxis Growth vs. Ab All Market | Praxis Growth vs. Extended Market Index |
| State Street vs. Praxis Growth Index | State Street vs. Small Pany Growth | State Street vs. Qs Defensive Growth | State Street vs. Champlain Mid Cap |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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