Correlation Between Praxis Small and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Praxis Small and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Absolute, you can compare the effects of market volatilities on Praxis Small and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Small and Goldman Sachs.

Diversification Opportunities for Praxis Small and Goldman Sachs

0.45

Correlation Coefficient

Praxis Small  Goldman Sachs

Very weak diversification

The 3 months correlation between Praxis and Goldman is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap and Goldman Sachs Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Absolute 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Absolute has no effect on the direction of Praxis Small i.e., Praxis Small and Goldman Sachs go up and down completely randomly.

Pair Corralation between Praxis Small and Goldman Sachs

Assuming the 90 days horizon Praxis Small Cap is expected to under-perform the Goldman Sachs. In addition to that, Praxis Small is 2.72 times more volatile than Goldman Sachs Absolute. It trades about -0.12 of its total potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.06 per unit of volatility. If you would invest  956.00  in Goldman Sachs Absolute on December 20, 2024 and sell it today you would earn a total of  14.00  from holding Goldman Sachs Absolute or generate 1.46% return on investment over 90 days.

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

Praxis Small Cap  vs.  Goldman Sachs Absolute

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.

Goldman Sachs Absolute

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Absolute are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs 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 Small and Goldman Sachs

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

The idea behind Praxis Small Cap and Goldman Sachs Absolute 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.