Correlation Between Brandes Core and Brandes Global

Can any of the company-specific risk be diversified away by investing in both Brandes Core and Brandes Global 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 Core and Brandes Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brandes E Plus and Brandes Global Equity, you can compare the effects of market volatilities on Brandes Core and Brandes Global 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 Core with a short position of Brandes Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Core and Brandes Global.

Diversification Opportunities for Brandes Core and Brandes Global

-0.49

Correlation Coefficient

Brandes Core  Brandes Global

Very good diversification

The 3 months correlation between Brandes and Brandes is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Brandes E Plus and Brandes Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Global Equity and Brandes Core 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 E Plus are associated (or correlated) with Brandes Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Global Equity has no effect on the direction of Brandes Core i.e., Brandes Core and Brandes Global go up and down completely randomly.

Pair Corralation between Brandes Core and Brandes Global

Assuming the 90 days horizon Brandes E Plus is expected to under-perform the Brandes Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Brandes E Plus is 2.59 times less risky than Brandes Global. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Brandes Global Equity is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,124  in Brandes Global Equity on September 5, 2024 and sell it today you would earn a total of  112.00  from holding Brandes Global Equity or generate 3.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brandes E Plus  vs.  Brandes Global Equity

Brandes E Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brandes E Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Brandes Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brandes Global Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes Global Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Brandes Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brandes Core and Brandes Global

The main advantage of trading using opposite Brandes Core and Brandes Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Core position performs unexpectedly, Brandes Global 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 Global will offset losses from the drop in Brandes Global's long position.

The idea behind Brandes E Plus and Brandes Global Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..