Correlation Between Eventide Large and Praxis Growth

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

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

Diversification Opportunities for Eventide Large and Praxis Growth

0.82

Correlation Coefficient

Eventide Large  Praxis Growth

Very poor diversification

The 3 months correlation between Eventide and Praxis is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eventide Large Cap 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 Eventide 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 Eventide Large Cap 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 Eventide Large i.e., Eventide Large and Praxis Growth go up and down completely randomly.

Pair Corralation between Eventide Large and Praxis Growth

Assuming the 90 days horizon Eventide Large Cap is expected to generate 0.79 times more return on investment than Praxis Growth. However, Eventide Large Cap is 1.26 times less risky than Praxis Growth. It trades about -0.05 of its potential returns per unit of risk. Praxis Growth Index is currently generating about -0.13 per unit of risk. If you would invest  1,391  in Eventide Large Cap on December 29, 2024 and sell it today you would lose (54.00) from holding Eventide Large Cap or give up 3.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Eventide Large Cap  vs.  Praxis Growth Index

Eventide Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eventide Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eventide Large 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

Very Weak

Over the last 90 days Praxis Growth Index 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.

Pair Trading with Eventide Large and Praxis Growth

The main advantage of trading using opposite Eventide Large and Praxis Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eventide Large 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 Eventide Large Cap 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.