Correlation Between Baron Emerging and Brandes International
Can any of the company-specific risk be diversified away by investing in both Baron Emerging and Brandes International 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 Baron Emerging and Brandes International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Emerging Markets and Brandes International Small, you can compare the effects of market volatilities on Baron Emerging and Brandes International 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 Baron Emerging with a short position of Brandes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Emerging and Brandes International.
Diversification Opportunities for Baron Emerging and Brandes International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Brandes is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets and Brandes International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes International and Baron 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 Baron Emerging Markets are associated (or correlated) with Brandes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes International has no effect on the direction of Baron Emerging i.e., Baron Emerging and Brandes International go up and down completely randomly.
Pair Corralation between Baron Emerging and Brandes International
Assuming the 90 days horizon Baron Emerging Markets is expected to under-perform the Brandes International. In addition to that, Baron Emerging is 1.43 times more volatile than Brandes International Small. It trades about -0.12 of its total potential returns per unit of risk. Brandes International Small is currently generating about 0.01 per unit of volatility. If you would invest 1,891 in Brandes International Small on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Brandes International Small or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Emerging Markets vs. Brandes International Small
Performance |
| Timeline |
| Baron Emerging Markets |
| Brandes International |
Baron Emerging and Brandes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Emerging and Brandes International
The main advantage of trading using opposite Baron Emerging and Brandes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Emerging position performs unexpectedly, Brandes International 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 International will offset losses from the drop in Brandes International's long position.| Baron Emerging vs. Eaton Vance Income | Baron Emerging vs. Baird Aggregate Bond | Baron Emerging vs. Champlain Small | Baron Emerging vs. Mfs Emerging Markets |
| Brandes International vs. Brandes Small Cap | Brandes International vs. Brandes Small Cap | Brandes International vs. Brandes E Plus | Brandes International vs. Brandes Emerging Markets |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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