Correlation Between Aristotle Funds and Praxis Small
Can any of the company-specific risk be diversified away by investing in both Aristotle Funds 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 Aristotle Funds and Praxis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristotle Funds Series and Praxis Small Cap, you can compare the effects of market volatilities on Aristotle Funds 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 Aristotle Funds with a short position of Praxis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristotle Funds and Praxis Small.
Diversification Opportunities for Aristotle Funds and Praxis Small
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aristotle and Praxis is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aristotle Funds Series 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 Aristotle Funds 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 Aristotle Funds Series 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 Aristotle Funds i.e., Aristotle Funds and Praxis Small go up and down completely randomly.
Pair Corralation between Aristotle Funds and Praxis Small
Assuming the 90 days horizon Aristotle Funds Series is expected to under-perform the Praxis Small. In addition to that, Aristotle Funds is 1.83 times more volatile than Praxis Small Cap. It trades about -0.37 of its total potential returns per unit of risk. Praxis Small Cap is currently generating about -0.33 per unit of volatility. If you would invest 1,180 in Praxis Small Cap on September 26, 2024 and sell it today you would lose (85.00) from holding Praxis Small Cap or give up 7.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aristotle Funds Series vs. Praxis Small Cap
Performance |
Timeline |
Aristotle Funds Series |
Praxis Small Cap |
Aristotle Funds and Praxis Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aristotle Funds and Praxis Small
The main advantage of trading using opposite Aristotle Funds and Praxis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristotle Funds 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.Aristotle Funds vs. Aristotle Funds Series | Aristotle Funds vs. Aristotle Funds Series | Aristotle Funds vs. Aristotle International Eq | Aristotle Funds vs. Aristotle Funds Series |
Praxis Small vs. Praxis Growth Index | Praxis Small vs. Praxis International Index | Praxis Small vs. Praxis International Index | Praxis Small vs. Praxis Genesis Balanced |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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