Correlation Between Brandes International and Brandes Core
Can any of the company-specific risk be diversified away by investing in both Brandes International 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 International 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 International Equity and Brandes E Plus, you can compare the effects of market volatilities on Brandes International 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 International with a short position of Brandes Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes International and Brandes Core.
Diversification Opportunities for Brandes International and Brandes Core
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brandes and Brandes is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Brandes International Equity 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 International 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 International Equity 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 International i.e., Brandes International and Brandes Core go up and down completely randomly.
Pair Corralation between Brandes International and Brandes Core
Assuming the 90 days horizon Brandes International Equity is expected to under-perform the Brandes Core. In addition to that, Brandes International is 2.64 times more volatile than Brandes E Plus. It trades about -0.3 of its total potential returns per unit of risk. Brandes E Plus is currently generating about -0.08 per unit of volatility. If you would invest 830.00 in Brandes E Plus on August 26, 2024 and sell it today you would lose (4.00) from holding Brandes E Plus or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes International Equity vs. Brandes E Plus
Performance |
| Timeline |
| Brandes International |
| Brandes E Plus |
Brandes International and Brandes Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes International and Brandes Core
The main advantage of trading using opposite Brandes International and Brandes Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes International 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 International vs. Tcm Small Cap | Brandes International vs. Vanguard Short Term Investment Grade | Brandes International vs. Goldman Sachs Growth | Brandes International vs. Us Small Cap |
| Brandes Core vs. Brandes Small Cap | Brandes Core vs. Brandes Small Cap | Brandes Core vs. Brandes Small Cap | Brandes Core vs. Brandes E Plus |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |