Correlation Between Praxis Growth and Avantis International

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

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

Diversification Opportunities for Praxis Growth and Avantis International

-0.42

Correlation Coefficient

Praxis Growth  Avantis International

Very good diversification

The 3 months correlation between Praxis and Avantis is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Growth Index and Avantis International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Praxis Growth 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 Growth Index are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of Praxis Growth i.e., Praxis Growth and Avantis International go up and down completely randomly.

Pair Corralation between Praxis Growth and Avantis International

Assuming the 90 days horizon Praxis Growth Index is expected to generate 0.96 times more return on investment than Avantis International. However, Praxis Growth Index is 1.04 times less risky than Avantis International. It trades about 0.18 of its potential returns per unit of risk. Avantis International Small is currently generating about -0.05 per unit of risk. If you would invest  4,603  in Praxis Growth Index on September 12, 2024 and sell it today you would earn a total of  468.00  from holding Praxis Growth Index or generate 10.17% return on investment over 90 days.

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

Praxis Growth Index  vs.  Avantis International Small

Praxis Growth Index

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Growth Index are ranked lower than 14 (%) 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.

Avantis International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Avantis International 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 Growth and Avantis International

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

The idea behind Praxis Growth Index and Avantis International Small 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 CEOs Directory module to screen CEOs from public companies around the world.