Correlation Between Praxis Value and Praxis Small
Can any of the company-specific risk be diversified away by investing in both Praxis Value 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 Praxis Value and Praxis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Praxis Value Index and Praxis Small Cap, you can compare the effects of market volatilities on Praxis Value 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 Praxis Value with a short position of Praxis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Value and Praxis Small.
Diversification Opportunities for Praxis Value and Praxis Small
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Praxis and PRAXIS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Value Index 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 Praxis Value 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 Value Index 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 Praxis Value i.e., Praxis Value and Praxis Small go up and down completely randomly.
Pair Corralation between Praxis Value and Praxis Small
Assuming the 90 days horizon Praxis Value Index is expected to under-perform the Praxis Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Praxis Value Index is 1.18 times less risky than Praxis Small. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Praxis Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Praxis Value Index vs. Praxis Small Cap
Performance |
| Timeline |
| Praxis Value Index |
| Praxis Small Cap |
Praxis Value and Praxis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Praxis Value and Praxis Small
The main advantage of trading using opposite Praxis Value and Praxis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Value 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.| Praxis Value vs. Western Assets Emerging | Praxis Value vs. Ashmore Emerging Markets | Praxis Value vs. Commodities Strategy Fund | Praxis Value vs. Aqr Tm Emerging |
| Praxis Small vs. Aig Government Money | Praxis Small vs. Dws Government Money | Praxis Small vs. Vanguard Money Market | Praxis Small vs. Elfun Government Money |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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