Correlation Between Brandes Small and Brandes Emerging
Can any of the company-specific risk be diversified away by investing in both Brandes Small 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 Small 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 Small Cap and Brandes Emerging Markets, you can compare the effects of market volatilities on Brandes Small 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 Small with a short position of Brandes Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Small and Brandes Emerging.
Diversification Opportunities for Brandes Small and Brandes Emerging
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between BRANDES and Brandes is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Small Cap 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 Small 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 Small Cap 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 Small i.e., Brandes Small and Brandes Emerging go up and down completely randomly.
Pair Corralation between Brandes Small and Brandes Emerging
Assuming the 90 days horizon Brandes Small Cap is expected to generate 1.18 times more return on investment than Brandes Emerging. However, Brandes Small is 1.18 times more volatile than Brandes Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Brandes Emerging Markets is currently generating about 0.06 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes Small Cap vs. Brandes Emerging Markets
Performance |
| Timeline |
| Brandes Small Cap |
| Brandes Emerging Markets |
Brandes Small and Brandes Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Small and Brandes Emerging
The main advantage of trading using opposite Brandes Small and Brandes Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Small 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 Small vs. Deutsche Health And | Brandes Small vs. Fidelity Advisor Health | Brandes Small vs. Baillie Gifford Health | Brandes Small vs. Baron Health Care |
| Brandes Emerging vs. Baron Emerging Markets | Brandes Emerging vs. Brandes International Small | Brandes Emerging vs. Brandes International Equity | Brandes Emerging vs. Guggenheim Macro Opportunities |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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