Correlation Between State Street and Praxis Growth
Can any of the company-specific risk be diversified away by investing in both State Street and Praxis Growth 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 State Street and Praxis Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Equity and Praxis Growth Index, you can compare the effects of market volatilities on State Street and Praxis Growth 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 State Street with a short position of Praxis Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Praxis Growth.
Diversification Opportunities for State Street and Praxis Growth
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Praxis is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding State Street Equity and Praxis Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Growth Index and State Street 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 State Street Equity are associated (or correlated) with Praxis Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Growth Index has no effect on the direction of State Street i.e., State Street and Praxis Growth go up and down completely randomly.
Pair Corralation between State Street and Praxis Growth
Assuming the 90 days horizon State Street is expected to generate 1.07 times less return on investment than Praxis Growth. But when comparing it to its historical volatility, State Street Equity is 1.29 times less risky than Praxis Growth. It trades about 0.14 of its potential returns per unit of risk. Praxis Growth Index is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,250 in Praxis Growth Index on August 29, 2024 and sell it today you would earn a total of 1,698 from holding Praxis Growth Index or generate 52.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Equity vs. Praxis Growth Index
Performance |
| Timeline |
| State Street Equity |
| Praxis Growth Index |
State Street and Praxis Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Praxis Growth
The main advantage of trading using opposite State Street and Praxis Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Praxis Growth 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 Growth will offset losses from the drop in Praxis Growth's long position.| State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Target | State Street vs. State Street Target |
| Praxis Growth vs. Praxis Small Cap | Praxis Growth vs. Praxis Small Cap | Praxis Growth vs. Praxis International Index | Praxis Growth vs. Praxis Value 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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