Correlation Between Brandes Emerging and Brandes Emerging
Can any of the company-specific risk be diversified away by investing in both Brandes Emerging and Brandes 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 Brandes 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 Brandes Emerging Markets, you can compare the effects of market volatilities on Brandes Emerging and Brandes 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 Brandes Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Emerging and Brandes Emerging.
Diversification Opportunities for Brandes Emerging and Brandes Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brandes and Brandes is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Emerging Markets and Brandes Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes 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 Brandes Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Emerging Markets has no effect on the direction of Brandes Emerging i.e., Brandes Emerging and Brandes Emerging go up and down completely randomly.
Pair Corralation between Brandes Emerging and Brandes Emerging
Assuming the 90 days horizon Brandes Emerging Markets is expected to under-perform the Brandes Emerging. In addition to that, Brandes Emerging is 1.01 times more volatile than Brandes Emerging Markets. It trades about -0.25 of its total potential returns per unit of risk. Brandes Emerging Markets is currently generating about -0.25 per unit of volatility. If you would invest 901.00 in Brandes Emerging Markets on August 26, 2024 and sell it today you would lose (39.00) from holding Brandes Emerging Markets or give up 4.33% 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. Brandes Emerging Markets
Performance |
| Timeline |
| Brandes Emerging Markets |
| Brandes Emerging Markets |
Brandes Emerging and Brandes Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Emerging and Brandes Emerging
The main advantage of trading using opposite Brandes Emerging and Brandes Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Emerging position performs unexpectedly, Brandes 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 Brandes Emerging will offset losses from the drop in Brandes 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 |
| Brandes Emerging vs. Baron Emerging Markets | Brandes Emerging vs. Brandes International Equity | Brandes Emerging vs. Guggenheim Macro Opportunities | Brandes Emerging vs. Aqr Diversified Arbitrage |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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