Correlation Between Brandes International and Brandes Emerging
Can any of the company-specific risk be diversified away by investing in both Brandes International and Brandes Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Brandes International and Brandes Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes International and Brandes Emerging.
Diversification Opportunities for Brandes International and Brandes Emerging
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brandes and Brandes is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Brandes International Equity and Brandes Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Emerging Markets has no effect on the direction of Brandes International i.e., Brandes International and Brandes Emerging go up and down completely randomly.
Pair Corralation between Brandes International and Brandes Emerging
Assuming the 90 days horizon Brandes International Equity is expected to under-perform the Brandes Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Brandes International Equity is 1.12 times less risky than Brandes Emerging. The mutual fund trades about -0.28 of its potential returns per unit of risk. The Brandes Emerging Markets is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 886.00 in Brandes Emerging Markets on August 26, 2024 and sell it today you would lose (39.00) from holding Brandes Emerging Markets or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes International Equity vs. Brandes Emerging Markets
Performance |
| Timeline |
| Brandes International |
| Brandes Emerging Markets |
Brandes International and Brandes Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes International and Brandes Emerging
The main advantage of trading using opposite Brandes International and Brandes Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes International position performs unexpectedly, Brandes Emerging 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 Emerging will offset losses from the drop in Brandes Emerging'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 Emerging vs. Baron Emerging Markets | Brandes Emerging vs. Brandes International Equity | Brandes Emerging vs. Guggenheim Macro Opportunities | Brandes Emerging vs. Aqr Diversified Arbitrage |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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