Correlation Between Praxis Small and Praxis International
Can any of the company-specific risk be diversified away by investing in both Praxis Small 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 Praxis Small and Praxis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Praxis Small Cap and Praxis International Index, you can compare the effects of market volatilities on Praxis Small 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 Praxis Small with a short position of Praxis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Small and Praxis International.
Diversification Opportunities for Praxis Small and Praxis International
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PRAXIS and PRAXIS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap and Praxis International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis International and Praxis Small 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 Small Cap 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 Praxis Small i.e., Praxis Small and Praxis International go up and down completely randomly.
Pair Corralation between Praxis Small and Praxis International
Assuming the 90 days horizon Praxis Small Cap is expected to generate 1.5 times more return on investment than Praxis International. However, Praxis Small is 1.5 times more volatile than Praxis International Index. It trades about 0.06 of its potential returns per unit of risk. Praxis International Index is currently generating about 0.02 per unit of risk. If you would invest 1,049 in Praxis Small Cap on November 2, 2024 and sell it today you would earn a total of 72.00 from holding Praxis Small Cap or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
Praxis Small Cap vs. Praxis International Index
Performance |
| Timeline |
| Praxis Small Cap |
| Praxis International |
Praxis Small and Praxis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Praxis Small and Praxis International
The main advantage of trading using opposite Praxis Small and Praxis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Small 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.| Praxis Small vs. Aig Government Money | Praxis Small vs. Dws Government Money | Praxis Small vs. Vanguard Money Market | Praxis Small vs. Elfun Government Money |
| Praxis International vs. Praxis Growth Index | Praxis International vs. Praxis Small Cap | Praxis International vs. Praxis Small Cap | Praxis International vs. Praxis International Index |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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