Correlation Between Praxis Small and Tax-free Conservative

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

Diversification Opportunities for Praxis Small and Tax-free Conservative

0.82

Correlation Coefficient

Praxis Small  Tax-free Conservative

Very poor diversification

The 3 months correlation between Praxis and Tax-free is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Small Cap and Tax Free Conservative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Free Conservative 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 Tax-free Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Free Conservative has no effect on the direction of Praxis Small i.e., Praxis Small and Tax-free Conservative go up and down completely randomly.

Pair Corralation between Praxis Small and Tax-free Conservative

Assuming the 90 days horizon Praxis Small Cap is expected to generate 25.84 times more return on investment than Tax-free Conservative. However, Praxis Small is 25.84 times more volatile than Tax Free Conservative Income. It trades about 0.11 of its potential returns per unit of risk. Tax Free Conservative Income is currently generating about 0.21 per unit of risk. If you would invest  1,182  in Praxis Small Cap on June 30, 2025 and sell it today you would earn a total of  79.00  from holding Praxis Small Cap or generate 6.68% return on investment over 90 days.

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

Praxis Small Cap  vs.  Tax Free Conservative Income

Praxis Small Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Praxis Small may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Tax Free Conservative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Free Conservative Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-free Conservative 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 Tax-free Conservative

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

The idea behind Praxis Small Cap and Tax Free Conservative Income 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.