Correlation Between Praxis Small and Baillie Gifford

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

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

Diversification Opportunities for Praxis Small and Baillie Gifford

0.09

Correlation Coefficient

Praxis Small  Baillie Gifford

Significant diversification

The 3 months correlation between Praxis and Baillie is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap and Baillie Gifford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Inte and Praxis Small 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 Small Cap are associated (or correlated) with Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Inte has no effect on the direction of Praxis Small i.e., Praxis Small and Baillie Gifford go up and down completely randomly.

Pair Corralation between Praxis Small and Baillie Gifford

Assuming the 90 days horizon Praxis Small Cap is expected to under-perform the Baillie Gifford. But the mutual fund apears to be less risky and, when comparing its historical volatility, Praxis Small Cap is 1.57 times less risky than Baillie Gifford. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Baillie Gifford International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  777.00  in Baillie Gifford International on December 20, 2024 and sell it today you would earn a total of  59.00  from holding Baillie Gifford International or generate 7.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Praxis Small Cap  vs.  Baillie Gifford International

Praxis Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Praxis Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Baillie Gifford Inte

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford International are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Baillie Gifford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Praxis Small and Baillie Gifford

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

The idea behind Praxis Small Cap and Baillie Gifford International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.