Correlation Between Mesirow Financial and Praxis Small
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Praxis Small 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 Mesirow Financial and Praxis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and Praxis Small Cap, you can compare the effects of market volatilities on Mesirow Financial and Praxis Small 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 Mesirow Financial with a short position of Praxis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Praxis Small.
Diversification Opportunities for Mesirow Financial and Praxis Small
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesirow and Praxis is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Praxis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Small Cap and Mesirow Financial 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 Mesirow Financial Small are associated (or correlated) with Praxis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Small Cap has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Praxis Small go up and down completely randomly.
Pair Corralation between Mesirow Financial and Praxis Small
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 0.97 times more return on investment than Praxis Small. However, Mesirow Financial Small is 1.04 times less risky than Praxis Small. It trades about 0.27 of its potential returns per unit of risk. Praxis Small Cap is currently generating about 0.24 per unit of risk. If you would invest 1,250 in Mesirow Financial Small on October 24, 2024 and sell it today you would earn a total of 53.00 from holding Mesirow Financial Small or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Praxis Small Cap
Performance |
| Timeline |
| Mesirow Financial Small |
| Praxis Small Cap |
Mesirow Financial and Praxis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Praxis Small
The main advantage of trading using opposite Mesirow Financial and Praxis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Praxis Small 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 Small will offset losses from the drop in Praxis Small's long position.| Mesirow Financial vs. Buffalo High Yield | Mesirow Financial vs. Transamerica High Yield | Mesirow Financial vs. Jpmorgan High Yield | Mesirow Financial vs. Lord Abbett Short |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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