Correlation Between Brandes Global and Brandes Small
Can any of the company-specific risk be diversified away by investing in both Brandes Global 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 Global 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 Global Equity and Brandes Small Cap, you can compare the effects of market volatilities on Brandes Global 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 Global with a short position of Brandes Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Global and Brandes Small.
Diversification Opportunities for Brandes Global and Brandes Small
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brandes and BRANDES is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Global Equity 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 Global 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 Global Equity 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 Global i.e., Brandes Global and Brandes Small go up and down completely randomly.
Pair Corralation between Brandes Global and Brandes Small
Assuming the 90 days horizon Brandes Global is expected to generate 1.57 times less return on investment than Brandes Small. But when comparing it to its historical volatility, Brandes Global Equity is 1.36 times less risky than Brandes Small. It trades about 0.08 of its potential returns per unit of risk. Brandes Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,061 in Brandes Small Cap on August 30, 2024 and sell it today you would earn a total of 634.00 from holding Brandes Small Cap or generate 59.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes Global Equity vs. Brandes Small Cap
Performance |
| Timeline |
| Brandes Global Equity |
| Brandes Small Cap |
Brandes Global and Brandes Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Global and Brandes Small
The main advantage of trading using opposite Brandes Global and Brandes Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Global 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 Global vs. Fidelity Sai Convertible | Brandes Global vs. Virtus Convertible | Brandes Global vs. Lord Abbett Convertible | Brandes Global vs. Calamos Dynamic Convertible |
| Brandes Small vs. Deutsche Health And | Brandes Small vs. Fidelity Advisor Health | Brandes Small vs. Baillie Gifford Health | Brandes Small vs. Baron Health Care |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |