Correlation Between American Funds and Brandes Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Brandes Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Brandes Emerging Markets, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Brandes Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Brandes Emerging.
Diversification Opportunities for American Funds and Brandes Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Brandes is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New 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 American Funds 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 American Funds New 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 American Funds i.e., American Funds and Brandes Emerging go up and down completely randomly.
Pair Corralation between American Funds and Brandes Emerging
Assuming the 90 days horizon American Funds New is expected to generate 0.86 times more return on investment than Brandes Emerging. However, American Funds New is 1.16 times less risky than Brandes Emerging. It trades about -0.19 of its potential returns per unit of risk. Brandes Emerging Markets is currently generating about -0.28 per unit of risk. If you would invest 8,355 in American Funds New on August 30, 2024 and sell it today you would lose (230.00) from holding American Funds New or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Brandes Emerging Markets
Performance |
| Timeline |
| American Funds New |
| Brandes Emerging Markets |
American Funds and Brandes Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Brandes Emerging
The main advantage of trading using opposite American Funds and Brandes Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Vanguard Emerging Markets | American Funds vs. Vanguard Emerging Markets | American Funds vs. Vanguard Emerging Markets | American Funds vs. Vanguard Emerging Markets |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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