Correlation Between Praxis Small and Aqr Long-short
Can any of the company-specific risk be diversified away by investing in both Praxis Small and Aqr Long-short 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 Aqr Long-short 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 Aqr Long Short Equity, you can compare the effects of market volatilities on Praxis Small and Aqr Long-short 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 Aqr Long-short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Small and Aqr Long-short.
Diversification Opportunities for Praxis Small and Aqr Long-short
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between PRAXIS and Aqr is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short 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 Aqr Long-short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Praxis Small i.e., Praxis Small and Aqr Long-short go up and down completely randomly.
Pair Corralation between Praxis Small and Aqr Long-short
Assuming the 90 days horizon Praxis Small is expected to generate 1.56 times less return on investment than Aqr Long-short. In addition to that, Praxis Small is 2.38 times more volatile than Aqr Long Short Equity. It trades about 0.06 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.23 per unit of volatility. If you would invest 1,506 in Aqr Long Short Equity on November 2, 2024 and sell it today you would earn a total of 181.00 from holding Aqr Long Short Equity or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Praxis Small Cap vs. Aqr Long Short Equity
Performance |
| Timeline |
| Praxis Small Cap |
| Aqr Long Short |
Praxis Small and Aqr Long-short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Praxis Small and Aqr Long-short
The main advantage of trading using opposite Praxis Small and Aqr Long-short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Small position performs unexpectedly, Aqr Long-short 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 Aqr Long-short will offset losses from the drop in Aqr Long-short'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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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