Correlation Between Brandes Emerging and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Brandes Emerging and Ishares Municipal 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 Ishares Municipal 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 Ishares Municipal Bond, you can compare the effects of market volatilities on Brandes Emerging and Ishares Municipal 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 Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Emerging and Ishares Municipal.
Diversification Opportunities for Brandes Emerging and Ishares Municipal
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brandes and Ishares is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Emerging Markets and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond 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 Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Brandes Emerging i.e., Brandes Emerging and Ishares Municipal go up and down completely randomly.
Pair Corralation between Brandes Emerging and Ishares Municipal
Assuming the 90 days horizon Brandes Emerging Markets is expected to generate 3.72 times more return on investment than Ishares Municipal. However, Brandes Emerging is 3.72 times more volatile than Ishares Municipal Bond. It trades about 0.05 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.03 per unit of risk. If you would invest 856.00 in Brandes Emerging Markets on November 28, 2024 and sell it today you would earn a total of 48.00 from holding Brandes Emerging Markets or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
Brandes Emerging Markets vs. Ishares Municipal Bond
Performance |
| Timeline |
| Brandes Emerging Markets |
| Ishares Municipal Bond |
Brandes Emerging and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Emerging and Ishares Municipal
The main advantage of trading using opposite Brandes Emerging and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Emerging position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Brandes Emerging vs. Elfun Diversified Fund | Brandes Emerging vs. Jhancock Diversified Macro | Brandes Emerging vs. Delaware Limited Term Diversified | Brandes Emerging vs. Lord Abbett Diversified |
| Ishares Municipal vs. Rationalrgn Hedged Equity | Ishares Municipal vs. Dodge International Stock | Ishares Municipal vs. Rbc Funds Trust | Ishares Municipal vs. Gmo Global 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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