Correlation Between Ivy High and Brandes Global

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

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

Diversification Opportunities for Ivy High and Brandes Global

-0.45

Correlation Coefficient

Ivy High  Brandes Global

Very good diversification

The 3 months correlation between Ivy and Brandes is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ivy High Income 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 Ivy High 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 Ivy High Income 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 Ivy High i.e., Ivy High and Brandes Global go up and down completely randomly.

Pair Corralation between Ivy High and Brandes Global

Assuming the 90 days horizon Ivy High Income is expected to under-perform the Brandes Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ivy High Income is 2.61 times less risky than Brandes Global. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Brandes Global Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,863  in Brandes Global Equity on December 28, 2024 and sell it today you would earn a total of  271.00  from holding Brandes Global Equity or generate 9.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Ivy High Income  vs.  Brandes Global Equity

Ivy High Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivy High Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ivy High is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Brandes Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes Global Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Brandes Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ivy High and Brandes Global

The main advantage of trading using opposite Ivy High and Brandes Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivy High 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 Ivy High Income 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.