Correlation Between Praxis Growth and Precious Metals
Can any of the company-specific risk be diversified away by investing in both Praxis Growth and Precious Metals 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 Growth and Precious Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Praxis Growth Index and Precious Metals Fund, you can compare the effects of market volatilities on Praxis Growth and Precious Metals 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 Growth with a short position of Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Growth and Precious Metals.
Diversification Opportunities for Praxis Growth and Precious Metals
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Praxis and Precious is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Growth Index and Precious Metals Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals and Praxis Growth 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 Growth Index are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals has no effect on the direction of Praxis Growth i.e., Praxis Growth and Precious Metals go up and down completely randomly.
Pair Corralation between Praxis Growth and Precious Metals
Assuming the 90 days horizon Praxis Growth Index is expected to generate 0.45 times more return on investment than Precious Metals. However, Praxis Growth Index is 2.25 times less risky than Precious Metals. It trades about 0.19 of its potential returns per unit of risk. Precious Metals Fund is currently generating about -0.04 per unit of risk. If you would invest 4,606 in Praxis Growth Index on September 17, 2024 and sell it today you would earn a total of 527.00 from holding Praxis Growth Index or generate 11.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Praxis Growth Index vs. Precious Metals Fund
Performance |
Timeline |
Praxis Growth Index |
Precious Metals |
Praxis Growth and Precious Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Praxis Growth and Precious Metals
The main advantage of trading using opposite Praxis Growth and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Growth position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.Praxis Growth vs. Versatile Bond Portfolio | Praxis Growth vs. Ab Small Cap | Praxis Growth vs. Commodities Strategy Fund | Praxis Growth vs. Shelton Funds |
Precious Metals vs. Qs Moderate Growth | Precious Metals vs. Praxis Growth Index | Precious Metals vs. Smallcap Growth Fund | Precious Metals vs. Needham Aggressive Growth |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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