Correlation Between Praxis Genesis and Touchstone Small

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

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

Diversification Opportunities for Praxis Genesis and Touchstone Small

-0.08

Correlation Coefficient

Praxis Genesis  Touchstone Small

Good diversification

The 3 months correlation between Praxis and Touchstone is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Genesis Servative and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Praxis Genesis 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 Genesis Servative are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Praxis Genesis i.e., Praxis Genesis and Touchstone Small go up and down completely randomly.

Pair Corralation between Praxis Genesis and Touchstone Small

Assuming the 90 days horizon Praxis Genesis Servative is expected to under-perform the Touchstone Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Praxis Genesis Servative is 3.84 times less risky than Touchstone Small. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Touchstone Small Cap is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,753  in Touchstone Small Cap on September 13, 2024 and sell it today you would earn a total of  335.00  from holding Touchstone Small Cap or generate 8.93% return on investment over 90 days.

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

Praxis Genesis Servative  vs.  Touchstone Small Cap

Praxis Genesis Servative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Praxis Genesis Servative has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Praxis Genesis is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Small Cap

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Praxis Genesis and Touchstone Small

The main advantage of trading using opposite Praxis Genesis and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Genesis position performs unexpectedly, Touchstone 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 Touchstone Small will offset losses from the drop in Touchstone Small's long position.

The idea behind Praxis Genesis Servative and Touchstone Small Cap 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.