Correlation Between Rational Strategic and Praxis International

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

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

Diversification Opportunities for Rational Strategic and Praxis International

0.96

Correlation Coefficient

Rational Strategic  Praxis International

Almost no diversification

The 3 months correlation between Rational and Praxis is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Rational Strategic Allocation and Praxis International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis International and Rational Strategic 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 Rational Strategic Allocation are associated (or correlated) with Praxis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis International has no effect on the direction of Rational Strategic i.e., Rational Strategic and Praxis International go up and down completely randomly.

Pair Corralation between Rational Strategic and Praxis International

Assuming the 90 days horizon Rational Strategic Allocation is expected to generate 1.82 times more return on investment than Praxis International. However, Rational Strategic is 1.82 times more volatile than Praxis International Index. It trades about 0.16 of its potential returns per unit of risk. Praxis International Index is currently generating about 0.14 per unit of risk. If you would invest  809.00  in Rational Strategic Allocation on July 24, 2025 and sell it today you would earn a total of  111.00  from holding Rational Strategic Allocation or generate 13.72% return on investment over 90 days.

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

Rational Strategic Allocation  vs.  Praxis International Index

Rational Strategic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Strategic Allocation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Strategic showed solid returns over the last few months and may actually be approaching a breakup point.

Praxis International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Praxis International Index are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Praxis 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 Rational Strategic and Praxis International

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

The idea behind Rational Strategic Allocation and Praxis International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.