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
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brandes and Brandes is -0.07. 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 is expected to generate 5.12 times less return on investment than Brandes Core. But when comparing it to its historical volatility, Brandes Emerging Markets is 10.92 times less risky than Brandes Core. It trades about 0.07 of its potential returns per unit of risk. Brandes E Plus is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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 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. Ishares Municipal Bond | Brandes Emerging vs. Gamco Global Telecommunications | Brandes Emerging vs. Ab Impact Municipal | Brandes Emerging vs. T Rowe Price |
| Brandes Core vs. Volumetric Fund Volumetric | Brandes Core vs. Balanced Fund Investor | Brandes Core vs. Rbb Fund | Brandes Core vs. Abr 7525 Volatility |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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