Correlation Between Praxis Small and American Funds
Can any of the company-specific risk be diversified away by investing in both Praxis Small and American Funds 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 American Funds 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 American Funds Fundamental, you can compare the effects of market volatilities on Praxis Small and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Small and American Funds.
Diversification Opportunities for Praxis Small and American Funds
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Praxis and American is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap and American Funds Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Funda 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Funda has no effect on the direction of Praxis Small i.e., Praxis Small and American Funds go up and down completely randomly.
Pair Corralation between Praxis Small and American Funds
Assuming the 90 days horizon Praxis Small Cap is expected to generate 1.14 times more return on investment than American Funds. However, Praxis Small is 1.14 times more volatile than American Funds Fundamental. It trades about 0.06 of its potential returns per unit of risk. American Funds Fundamental is currently generating about 0.06 per unit of risk. If you would invest 1,054 in Praxis Small Cap on November 3, 2024 and sell it today you would earn a total of 190.00 from holding Praxis Small Cap or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Praxis Small Cap vs. American Funds Fundamental
Performance |
| Timeline |
| Praxis Small Cap |
| American Funds Funda |
Praxis Small and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Praxis Small and American Funds
The main advantage of trading using opposite Praxis Small and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Small position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Praxis Small vs. Ambrus Core Bond | Praxis Small vs. Multisector Bond Sma | Praxis Small vs. Baird Quality Intermediate | Praxis Small vs. Rationalpier 88 Convertible |
| American Funds vs. Federated Emerging Market | American Funds vs. Siit Emerging Markets | American Funds vs. Mid Cap 15x Strategy | American Funds vs. Ashmore Emerging Markets |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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