Correlation Between Brandes Emerging and Brandes International
Can any of the company-specific risk be diversified away by investing in both Brandes Emerging 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 Brandes Emerging and Brandes International 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 Brandes International Small, you can compare the effects of market volatilities on Brandes Emerging 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 Brandes Emerging with a short position of Brandes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Emerging and Brandes International.
Diversification Opportunities for Brandes Emerging and Brandes International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brandes and Brandes is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Emerging Markets and Brandes International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes International 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 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 Brandes Emerging i.e., Brandes Emerging and Brandes International go up and down completely randomly.
Pair Corralation between Brandes Emerging and Brandes International
Assuming the 90 days horizon Brandes Emerging is expected to generate 1.18 times less return on investment than Brandes International. In addition to that, Brandes Emerging is 1.35 times more volatile than Brandes International Small. It trades about 0.05 of its total potential returns per unit of risk. Brandes International Small is currently generating about 0.08 per unit of volatility. If you would invest 1,786 in Brandes International Small on November 28, 2024 and sell it today you would earn a total of 122.00 from holding Brandes International Small or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes Emerging Markets vs. Brandes International Small
Performance |
| Timeline |
| Brandes Emerging Markets |
| Brandes International |
Brandes Emerging and Brandes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Emerging and Brandes International
The main advantage of trading using opposite Brandes Emerging and Brandes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Emerging 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.| Brandes Emerging vs. Ab Bond Inflation | Brandes Emerging vs. Cref Inflation Linked Bond | Brandes Emerging vs. Ab Bond Inflation | Brandes Emerging vs. Aqr Managed Futures |
| Brandes International vs. Ultra Short Fixed Income | Brandes International vs. T Rowe Price | Brandes International vs. Qs International Equity | Brandes International vs. Artisan Select Equity |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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