Correlation Between Brandes Emerging and Brandes Core
Can any of the company-specific risk be diversified away by investing in both Brandes Emerging 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 Brandes Emerging and Brandes Core 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 E Plus, you can compare the effects of market volatilities on Brandes Emerging 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 Brandes Emerging with a short position of Brandes Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Emerging and Brandes Core.
Diversification Opportunities for Brandes Emerging and Brandes Core
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brandes and Brandes is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Emerging Markets 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 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 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 Brandes Emerging i.e., Brandes Emerging and Brandes Core go up and down completely randomly.
Pair Corralation between Brandes Emerging and Brandes Core
Assuming the 90 days horizon Brandes Emerging Markets is expected to under-perform the Brandes Core. In addition to that, Brandes Emerging is 3.21 times more volatile than Brandes E Plus. It trades about -0.25 of its total potential returns per unit of risk. Brandes E Plus is currently generating about -0.08 per unit of volatility. If you would invest 838.00 in Brandes E Plus on August 26, 2024 and sell it today you would lose (4.00) from holding Brandes E Plus or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes Emerging Markets vs. Brandes E Plus
Performance |
| Timeline |
| Brandes Emerging Markets |
| Brandes E Plus |
Brandes Emerging and Brandes Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Emerging and Brandes Core
The main advantage of trading using opposite Brandes Emerging and Brandes Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Emerging 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.| Brandes Emerging vs. Baron Emerging Markets | Brandes Emerging vs. Brandes International Equity | Brandes Emerging vs. Guggenheim Macro Opportunities | Brandes Emerging vs. Aqr Diversified Arbitrage |
| Brandes Core vs. Brandes Small Cap | Brandes Core vs. Brandes Small Cap | Brandes Core vs. Brandes Small Cap | Brandes Core vs. Brandes E Plus |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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