Correlation Between Brandes Core and Brandes E
Can any of the company-specific risk be diversified away by investing in both Brandes Core and Brandes E 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 Brandes Core and Brandes E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brandes E Plus and Brandes E Plus, you can compare the effects of market volatilities on Brandes Core and Brandes E 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 Brandes Core with a short position of Brandes E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Core and Brandes E.
Diversification Opportunities for Brandes Core and Brandes E
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Brandes and Brandes is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Brandes E Plus 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 Brandes Core 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 Brandes E Plus are associated (or correlated) with Brandes E. 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 Brandes Core i.e., Brandes Core and Brandes E go up and down completely randomly.
Pair Corralation between Brandes Core and Brandes E
Assuming the 90 days horizon Brandes E Plus is expected to generate 1.0 times more return on investment than Brandes E. However, Brandes Core is 1.0 times more volatile than Brandes E Plus. It trades about 0.05 of its potential returns per unit of risk. Brandes E Plus is currently generating about 0.05 per unit of risk. If you would invest 767.00 in Brandes E Plus on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Brandes E Plus or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes E Plus vs. Brandes E Plus
Performance |
| Timeline |
| Brandes E Plus |
| Brandes E Plus |
Brandes Core and Brandes E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Core and Brandes E
The main advantage of trading using opposite Brandes Core and Brandes E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Core position performs unexpectedly, Brandes E 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 E will offset losses from the drop in Brandes E's long position.| 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 |
| Brandes E vs. Rationalpier 88 Convertible | Brandes E vs. Lord Abbett Convertible | Brandes E vs. Advent Claymore Convertible | Brandes E vs. Virtus Convertible |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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