Correlation Between Touchstone Large and Praxis Value
Can any of the company-specific risk be diversified away by investing in both Touchstone Large and Praxis Value 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 Touchstone Large and Praxis Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Large Cap and Praxis Value Index, you can compare the effects of market volatilities on Touchstone Large and Praxis Value 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 Touchstone Large with a short position of Praxis Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Large and Praxis Value.
Diversification Opportunities for Touchstone Large and Praxis Value
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Praxis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Large Cap and Praxis Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Value Index and Touchstone Large 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 Touchstone Large Cap are associated (or correlated) with Praxis Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Value Index has no effect on the direction of Touchstone Large i.e., Touchstone Large and Praxis Value go up and down completely randomly.
Pair Corralation between Touchstone Large and Praxis Value
Assuming the 90 days horizon Touchstone Large Cap is expected to generate 1.06 times more return on investment than Praxis Value. However, Touchstone Large is 1.06 times more volatile than Praxis Value Index. It trades about 0.19 of its potential returns per unit of risk. Praxis Value Index is currently generating about 0.16 per unit of risk. If you would invest 1,968 in Touchstone Large Cap on September 2, 2024 and sell it today you would earn a total of 159.00 from holding Touchstone Large Cap or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Large Cap vs. Praxis Value Index
Performance |
| Timeline |
| Touchstone Large Cap |
| Praxis Value Index |
Touchstone Large and Praxis Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Large and Praxis Value
The main advantage of trading using opposite Touchstone Large and Praxis Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Large position performs unexpectedly, Praxis Value 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 Value will offset losses from the drop in Praxis Value's long position.| Touchstone Large vs. Absolute Convertible Arbitrage | Touchstone Large vs. Advent Claymore Convertible | Touchstone Large vs. Gabelli Convertible And | Touchstone Large vs. Columbia Vertible Securities |
| Praxis Value vs. Praxis Growth Index | Praxis Value vs. Praxis Small Cap | Praxis Value vs. Praxis Small Cap | Praxis Value 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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