Correlation Between Ab Small and Praxis Small
Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small and Praxis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Praxis Small Cap, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Praxis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Praxis Small.
Diversification Opportunities for Ab Small and Praxis Small
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QUAIX and Praxis is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap 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 Ab 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 Ab Small Cap 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 Ab Small i.e., Ab Small and Praxis Small go up and down completely randomly.
Pair Corralation between Ab Small and Praxis Small
Assuming the 90 days horizon Ab Small Cap is expected to generate 1.02 times more return on investment than Praxis Small. However, Ab Small is 1.02 times more volatile than Praxis Small Cap. It trades about 0.05 of its potential returns per unit of risk. Praxis Small Cap is currently generating about 0.03 per unit of risk. If you would invest 5,911 in Ab Small Cap on October 23, 2024 and sell it today you would earn a total of 1,728 from holding Ab Small Cap or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Praxis Small Cap
Performance |
| Timeline |
| Ab Small Cap |
| Praxis Small Cap |
Ab Small and Praxis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Praxis Small
The main advantage of trading using opposite Ab Small and Praxis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.| Ab Small vs. Advent Claymore Convertible | Ab Small vs. Lord Abbett Convertible | Ab Small vs. Putnam Convertible Securities | Ab Small vs. Columbia Convertible Securities |
| Praxis Small vs. Praxis Growth Index | Praxis Small vs. Praxis Small Cap | Praxis Small vs. Praxis International Index | Praxis Small vs. Praxis International Index |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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