Correlation Between Select Fund and Brandes International
Can any of the company-specific risk be diversified away by investing in both Select Fund and Brandes 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 Select Fund and Brandes International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund R and Brandes International Small, you can compare the effects of market volatilities on Select Fund and Brandes 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 Select Fund with a short position of Brandes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Brandes International.
Diversification Opportunities for Select Fund and Brandes International
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Select and Brandes is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund R and Brandes International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes International and Select Fund 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 Select Fund R are associated (or correlated) with Brandes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes International has no effect on the direction of Select Fund i.e., Select Fund and Brandes International go up and down completely randomly.
Pair Corralation between Select Fund and Brandes International
Assuming the 90 days horizon Select Fund R is expected to generate 1.52 times more return on investment than Brandes International. However, Select Fund is 1.52 times more volatile than Brandes International Small. It trades about 0.1 of its potential returns per unit of risk. Brandes International Small is currently generating about 0.14 per unit of risk. If you would invest 7,322 in Select Fund R on September 3, 2024 and sell it today you would earn a total of 4,404 from holding Select Fund R or generate 60.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund R vs. Brandes International Small
Performance |
| Timeline |
| Select Fund R |
| Brandes International |
Select Fund and Brandes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Brandes International
The main advantage of trading using opposite Select Fund and Brandes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Brandes 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 Brandes International will offset losses from the drop in Brandes International's long position.| Select Fund vs. Select Fund C | Select Fund vs. Ultra Fund C | Select Fund vs. Ultra Fund R6 | Select Fund vs. Nasdaq 100 Fund Class |
| Brandes International vs. Artisan Small Cap | Brandes International vs. Pace Large Growth | Brandes International vs. Goldman Sachs Growth | Brandes International vs. Chase Growth Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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