Correlation Between Praxis Small and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both Praxis Small and Pace Municipal 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 Pace Municipal 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 Pace Municipal Fixed, you can compare the effects of market volatilities on Praxis Small and Pace Municipal 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 Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Small and Pace Municipal.
Diversification Opportunities for Praxis Small and Pace Municipal
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Praxis and Pace is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed 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 Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of Praxis Small i.e., Praxis Small and Pace Municipal go up and down completely randomly.
Pair Corralation between Praxis Small and Pace Municipal
Assuming the 90 days horizon Praxis Small Cap is expected to generate 7.02 times more return on investment than Pace Municipal. However, Praxis Small is 7.02 times more volatile than Pace Municipal Fixed. It trades about 0.03 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about 0.04 per unit of risk. If you would invest 903.00 in Praxis Small Cap on October 11, 2024 and sell it today you would earn a total of 172.00 from holding Praxis Small Cap or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Praxis Small Cap vs. Pace Municipal Fixed
Performance |
| Timeline |
| Praxis Small Cap |
| Pace Municipal Fixed |
Praxis Small and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Praxis Small and Pace Municipal
The main advantage of trading using opposite Praxis Small and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Small position performs unexpectedly, Pace Municipal 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| Praxis Small vs. Ab High Income | Praxis Small vs. Alliancebernstein Global Highome | Praxis Small vs. Lord Abbett Short | Praxis Small vs. Inverse High Yield |
| Pace Municipal vs. Artisan Small Cap | Pace Municipal vs. Franklin Small Cap | Pace Municipal vs. Praxis Small Cap | Pace Municipal vs. Lebenthal Lisanti Small |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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