Correlation Between Brandes Separately and Brandes Global

Can any of the company-specific risk be diversified away by investing in both Brandes Separately 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 Separately 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 Separately Managed and Brandes Global Equity, you can compare the effects of market volatilities on Brandes Separately 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 Separately with a short position of Brandes Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Separately and Brandes Global.

Diversification Opportunities for Brandes Separately and Brandes Global

-0.07

Correlation Coefficient

Brandes Separately  Brandes Global

Good diversification

The 3 months correlation between Brandes and Brandes is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Separately Managed 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 Separately 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 Separately Managed 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 Separately i.e., Brandes Separately and Brandes Global go up and down completely randomly.

Pair Corralation between Brandes Separately and Brandes Global

Assuming the 90 days horizon Brandes Separately Managed is expected to generate 0.26 times more return on investment than Brandes Global. However, Brandes Separately Managed is 3.89 times less risky than Brandes Global. It trades about -0.1 of its potential returns per unit of risk. Brandes Global Equity is currently generating about -0.05 per unit of risk. If you would invest  811.00  in Brandes Separately Managed on September 13, 2024 and sell it today you would lose (13.00) from holding Brandes Separately Managed or give up 1.6% of portfolio value over 90 days.

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

Brandes Separately Managed  vs.  Brandes Global Equity

Brandes Separately

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brandes Separately Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Brandes Separately 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

0 of 100

Modest

Over the last 90 days Brandes Global Equity has generated negative risk-adjusted returns adding no value to fund investors. 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 Separately and Brandes Global

The main advantage of trading using opposite Brandes Separately and Brandes Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Separately 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 Separately Managed 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.