Correlation Between Brandes Emerging and Baron Emerging
Can any of the company-specific risk be diversified away by investing in both Brandes Emerging and Baron Emerging 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 Emerging and Baron Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brandes Emerging Markets and Baron Emerging Markets, you can compare the effects of market volatilities on Brandes Emerging and Baron Emerging 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 Emerging with a short position of Baron Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Emerging and Baron Emerging.
Diversification Opportunities for Brandes Emerging and Baron Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brandes and Baron is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Emerging Markets and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets and Brandes Emerging 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 Emerging Markets are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Brandes Emerging i.e., Brandes Emerging and Baron Emerging go up and down completely randomly.
Pair Corralation between Brandes Emerging and Baron Emerging
Assuming the 90 days horizon Brandes Emerging Markets is expected to generate 0.84 times more return on investment than Baron Emerging. However, Brandes Emerging Markets is 1.2 times less risky than Baron Emerging. It trades about -0.25 of its potential returns per unit of risk. Baron Emerging Markets is currently generating about -0.22 per unit of risk. If you would invest 894.00 in Brandes Emerging Markets on August 26, 2024 and sell it today you would lose (38.00) from holding Brandes Emerging Markets or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes Emerging Markets vs. Baron Emerging Markets
Performance |
| Timeline |
| Brandes Emerging Markets |
| Baron Emerging Markets |
Brandes Emerging and Baron Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Emerging and Baron Emerging
The main advantage of trading using opposite Brandes Emerging and Baron Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Emerging position performs unexpectedly, Baron Emerging 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 Baron Emerging will offset losses from the drop in Baron Emerging's long position.| Brandes Emerging vs. Baron Emerging Markets | Brandes Emerging vs. Brandes International Equity | Brandes Emerging vs. Guggenheim Macro Opportunities | Brandes Emerging vs. Aqr Diversified Arbitrage |
| Baron Emerging vs. Eaton Vance Income | Baron Emerging vs. Baird Aggregate Bond | Baron Emerging vs. Champlain Small | Baron Emerging vs. Mfs Emerging Markets |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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