Correlation Between International Fund and Brown Capital

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

By analyzing existing cross correlation between International Fund International and The Brown Capital, you can compare the effects of market volatilities on International Fund and Brown Capital 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 International Fund with a short position of Brown Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fund and Brown Capital.

Diversification Opportunities for International Fund and Brown Capital

0.07

Correlation Coefficient

International Fund  Brown Capital

Significant diversification

The 3 months correlation between International and Brown is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding International Fund Internation and The Brown Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Capital and International Fund 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 International Fund International are associated (or correlated) with Brown Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Capital has no effect on the direction of International Fund i.e., International Fund and Brown Capital go up and down completely randomly.

Pair Corralation between International Fund and Brown Capital

Assuming the 90 days horizon International Fund International is expected to generate 0.14 times more return on investment than Brown Capital. However, International Fund International is 7.37 times less risky than Brown Capital. It trades about 0.06 of its potential returns per unit of risk. The Brown Capital is currently generating about -0.05 per unit of risk. If you would invest  3,671  in International Fund International on September 13, 2024 and sell it today you would earn a total of  89.00  from holding International Fund International or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

International Fund Internation  vs.  The Brown Capital

International Fund

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Fund International are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, International Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brown Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Brown Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with International Fund and Brown Capital

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

The idea behind International Fund International and The Brown Capital 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.