Correlation Between Brandes Small and Deutsche Health
Can any of the company-specific risk be diversified away by investing in both Brandes Small and Deutsche Health 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 Deutsche Health 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 Deutsche Health And, you can compare the effects of market volatilities on Brandes Small and Deutsche Health 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 Deutsche Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Small and Deutsche Health.
Diversification Opportunities for Brandes Small and Deutsche Health
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BRANDES and Deutsche is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Small Cap and Deutsche Health And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Health And 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 Deutsche Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Health And has no effect on the direction of Brandes Small i.e., Brandes Small and Deutsche Health go up and down completely randomly.
Pair Corralation between Brandes Small and Deutsche Health
Assuming the 90 days horizon Brandes Small Cap is expected to generate 1.45 times more return on investment than Deutsche Health. However, Brandes Small is 1.45 times more volatile than Deutsche Health And. It trades about 0.41 of its potential returns per unit of risk. Deutsche Health And is currently generating about -0.1 per unit of risk. If you would invest 1,503 in Brandes Small Cap on August 30, 2024 and sell it today you would earn a total of 192.00 from holding Brandes Small Cap or generate 12.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brandes Small Cap vs. Deutsche Health And
Performance |
| Timeline |
| Brandes Small Cap |
| Deutsche Health And |
Brandes Small and Deutsche Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Small and Deutsche Health
The main advantage of trading using opposite Brandes Small and Deutsche Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Small position performs unexpectedly, Deutsche Health 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 Deutsche Health will offset losses from the drop in Deutsche Health's long position.| Brandes Small vs. Brandes International Equity | Brandes Small vs. Brandes International Equity | Brandes Small vs. Brandes International Equity | Brandes Small vs. Brandes International Equity |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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