Correlation Between Eaton Vance and Praxis Growth

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

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

Diversification Opportunities for Eaton Vance and Praxis Growth

0.27

Correlation Coefficient

Eaton Vance  Praxis Growth

Modest diversification

The 3 months correlation between Eaton and Praxis is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Growth 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 Eaton Vance 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 Eaton Vance Growth 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 Eaton Vance i.e., Eaton Vance and Praxis Growth go up and down completely randomly.

Pair Corralation between Eaton Vance and Praxis Growth

Assuming the 90 days horizon Eaton Vance Growth is expected to under-perform the Praxis Growth. In addition to that, Eaton Vance is 1.76 times more volatile than Praxis Growth Index. It trades about -0.09 of its total potential returns per unit of risk. Praxis Growth Index is currently generating about 0.12 per unit of volatility. If you would invest  4,916  in Praxis Growth Index on September 28, 2024 and sell it today you would earn a total of  122.00  from holding Praxis Growth Index or generate 2.48% return on investment over 90 days.

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

Eaton Vance Growth  vs.  Praxis Growth Index

Eaton Vance Growth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Praxis Growth Index

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Growth Index are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Praxis Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eaton Vance and Praxis Growth

The main advantage of trading using opposite Eaton Vance and Praxis Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance 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 Eaton Vance Growth 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.