Correlation Between Praxis Impact and Guidepath Managed

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

By analyzing existing cross correlation between Praxis Impact Bond and Guidepath Managed Futures, you can compare the effects of market volatilities on Praxis Impact and Guidepath Managed 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 Impact with a short position of Guidepath Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Impact and Guidepath Managed.

Diversification Opportunities for Praxis Impact and Guidepath Managed

0.85

Correlation Coefficient

Praxis Impact  Guidepath Managed

Very poor diversification

The 3 months correlation between Praxis and Guidepath is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Impact Bond and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures and Praxis Impact 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 Impact Bond are associated (or correlated) with Guidepath Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of Praxis Impact i.e., Praxis Impact and Guidepath Managed go up and down completely randomly.

Pair Corralation between Praxis Impact and Guidepath Managed

Assuming the 90 days horizon Praxis Impact Bond is expected to under-perform the Guidepath Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Praxis Impact Bond is 1.81 times less risky than Guidepath Managed. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Guidepath Managed Futures is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  810.00  in Guidepath Managed Futures on September 15, 2024 and sell it today you would lose (19.00) from holding Guidepath Managed Futures or give up 2.35% of portfolio value over 90 days.

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

Praxis Impact Bond  vs.  Guidepath Managed Futures

Praxis Impact Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Guidepath Managed Futures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Praxis Impact and Guidepath Managed

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

The idea behind Praxis Impact Bond and Guidepath Managed Futures 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.