Correlation Between T Rowe and Praxis Growth

Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Praxis Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T Rowe Price and Praxis Growth Index, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Praxis Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Praxis Growth.

Diversification Opportunities for T Rowe and Praxis Growth

0.05

Correlation Coefficient

T Rowe  Praxis Growth

Significant diversification

The 3 months correlation between TADGX and Praxis is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Praxis Growth go up and down completely randomly.

Pair Corralation between T Rowe and Praxis Growth

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Praxis Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, T Rowe Price is 1.2 times less risky than Praxis Growth. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Praxis Growth Index is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,699  in Praxis Growth Index on September 21, 2024 and sell it today you would earn a total of  261.00  from holding Praxis Growth Index or generate 5.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

T Rowe Price  vs.  Praxis Growth Index

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Praxis Growth Index

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Growth Index are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Praxis Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Rowe and Praxis Growth

The main advantage of trading using opposite T Rowe and Praxis Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.

The idea behind T Rowe Price and Praxis Growth Index pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.