Correlation Between Moderately Aggressive and Brandes Emerging
Can any of the company-specific risk be diversified away by investing in both Moderately Aggressive 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 Moderately Aggressive and Brandes Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moderately Aggressive Balanced and Brandes Emerging Markets, you can compare the effects of market volatilities on Moderately Aggressive 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 Moderately Aggressive with a short position of Brandes Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderately Aggressive and Brandes Emerging.
Diversification Opportunities for Moderately Aggressive and Brandes Emerging
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Moderately and Brandes is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Moderately Aggressive Balanced 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 Moderately Aggressive 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 Moderately Aggressive Balanced 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 Moderately Aggressive i.e., Moderately Aggressive and Brandes Emerging go up and down completely randomly.
Pair Corralation between Moderately Aggressive and Brandes Emerging
Assuming the 90 days horizon Moderately Aggressive Balanced is expected to under-perform the Brandes Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Moderately Aggressive Balanced is 1.31 times less risky than Brandes Emerging. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Brandes Emerging Markets is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 852.00 in Brandes Emerging Markets on November 28, 2024 and sell it today you would earn a total of 37.00 from holding Brandes Emerging Markets or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moderately Aggressive Balanced vs. Brandes Emerging Markets
Performance |
| Timeline |
| Moderately Aggressive |
| Brandes Emerging Markets |
Moderately Aggressive and Brandes Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moderately Aggressive and Brandes Emerging
The main advantage of trading using opposite Moderately Aggressive and Brandes Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderately Aggressive 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.| Moderately Aggressive vs. Glg Intl Small | Moderately Aggressive vs. Nt International Small Mid | Moderately Aggressive vs. Transamerica International Small | Moderately Aggressive vs. Ep Emerging Markets |
| Brandes Emerging vs. Ab Bond Inflation | Brandes Emerging vs. Cref Inflation Linked Bond | Brandes Emerging vs. Ab Bond Inflation | Brandes Emerging vs. Aqr Managed Futures |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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