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 Small 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
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brandes and Brandes is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brandes International Small 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 Small 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 Small is expected to generate 0.8 times more return on investment than Brandes Emerging. However, Brandes International Small is 1.26 times less risky than Brandes Emerging. It trades about 0.14 of its potential returns per unit of risk. Brandes Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 1,286 in Brandes International Small on August 30, 2024 and sell it today you would earn a total of 602.00 from holding Brandes International Small or generate 46.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes International Small 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. Mfs Technology Fund | Brandes International vs. Goldman Sachs Technology | Brandes International vs. Towpath Technology | Brandes International vs. Allianzgi Technology Fund |
| Brandes Emerging vs. Qs Small Capitalization | Brandes Emerging vs. Small Midcap Dividend Income | Brandes Emerging vs. Small Pany Growth | Brandes Emerging vs. Ancorathelen Small Mid Cap |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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