Correlation Between Great-west Goldman and Praxis Value

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Can any of the company-specific risk be diversified away by investing in both Great-west Goldman and Praxis Value 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 Great-west Goldman and Praxis Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Goldman Sachs and Praxis Value Index, you can compare the effects of market volatilities on Great-west Goldman and Praxis Value 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 Great-west Goldman with a short position of Praxis Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Goldman and Praxis Value.

Diversification Opportunities for Great-west Goldman and Praxis Value

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Great-west and Praxis is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Great West Goldman Sachs and Praxis Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Value Index and Great-west Goldman 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 Great West Goldman Sachs are associated (or correlated) with Praxis Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Value Index has no effect on the direction of Great-west Goldman i.e., Great-west Goldman and Praxis Value go up and down completely randomly.

Pair Corralation between Great-west Goldman and Praxis Value

Assuming the 90 days horizon Great West Goldman Sachs is expected to under-perform the Praxis Value. In addition to that, Great-west Goldman is 1.79 times more volatile than Praxis Value Index. It trades about -0.24 of its total potential returns per unit of risk. Praxis Value Index is currently generating about -0.3 per unit of volatility. If you would invest  1,988  in Praxis Value Index on October 11, 2024 and sell it today you would lose (225.00) from holding Praxis Value Index or give up 11.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Great West Goldman Sachs  vs.  Praxis Value Index

 Performance 
       Timeline  
Great West Goldman 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Great West Goldman Sachs has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
Praxis Value Index 

Risk-Adjusted Performance

0 of 100

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

Great-west Goldman and Praxis Value Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Great-west Goldman and Praxis Value

The main advantage of trading using opposite Great-west Goldman and Praxis Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west Goldman position performs unexpectedly, Praxis Value 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 Praxis Value will offset losses from the drop in Praxis Value's long position.
The idea behind Great West Goldman Sachs and Praxis Value Index 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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