Correlation Between Absolute Convertible and Brandes Core
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Brandes Core 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 Absolute Convertible and Brandes Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Brandes E Plus, you can compare the effects of market volatilities on Absolute Convertible and Brandes Core 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 Absolute Convertible with a short position of Brandes Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Brandes Core.
Diversification Opportunities for Absolute Convertible and Brandes Core
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Absolute and Brandes is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Brandes E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes E Plus and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Brandes Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes E Plus has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Brandes Core go up and down completely randomly.
Pair Corralation between Absolute Convertible and Brandes Core
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.16 times more return on investment than Brandes Core. However, Absolute Convertible Arbitrage is 6.19 times less risky than Brandes Core. It trades about 0.5 of its potential returns per unit of risk. Brandes E Plus is currently generating about 0.04 per unit of risk. If you would invest 1,143 in Absolute Convertible Arbitrage on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Absolute Convertible Arbitrage or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Brandes E Plus
Performance |
| Timeline |
| Absolute Convertible |
| Brandes E Plus |
Absolute Convertible and Brandes Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Brandes Core
The main advantage of trading using opposite Absolute Convertible and Brandes Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Brandes Core 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 Brandes Core will offset losses from the drop in Brandes Core's long position.| Absolute Convertible vs. Aqr Managed Futures | Absolute Convertible vs. The Hartford Inflation | Absolute Convertible vs. Ab Municipal Bond | Absolute Convertible vs. Oklahoma College Savings |
| Brandes Core vs. Absolute Convertible Arbitrage | Brandes Core vs. Gabelli Convertible And | Brandes Core vs. Calamos Dynamic Convertible | Brandes Core vs. Putnam Convertible Incm Gwth |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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