Correlation Between Brandes Emerging and Brandes Small
Can any of the company-specific risk be diversified away by investing in both Brandes Emerging and Brandes Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Brandes Emerging and Brandes Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Emerging and Brandes Small.
Diversification Opportunities for Brandes Emerging and Brandes Small
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brandes and Brandes is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Emerging Markets and Brandes Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Small Cap has no effect on the direction of Brandes Emerging i.e., Brandes Emerging and Brandes Small go up and down completely randomly.
Pair Corralation between Brandes Emerging and Brandes Small
Assuming the 90 days horizon Brandes Emerging Markets is expected to under-perform the Brandes Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Brandes Emerging Markets is 1.68 times less risky than Brandes Small. The mutual fund trades about -0.27 of its potential returns per unit of risk. The Brandes Small Cap is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,578 in Brandes Small Cap on August 30, 2024 and sell it today you would earn a total of 201.00 from holding Brandes Small Cap or generate 12.74% 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 Small Cap
Performance |
| Timeline |
| Brandes Emerging Markets |
| Brandes Small Cap |
Brandes Emerging and Brandes Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Emerging and Brandes Small
The main advantage of trading using opposite Brandes Emerging and Brandes Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Emerging position performs unexpectedly, Brandes Small 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 Small will offset losses from the drop in Brandes Small'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 Small vs. Pgim Jennison Diversified | Brandes Small vs. Guggenheim Diversified Income | Brandes Small vs. T Rowe Price | Brandes Small vs. Delaware Limited Term Diversified |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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