Correlation Between Brandywineglobal and Plumb Balanced

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

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

Diversification Opportunities for Brandywineglobal and Plumb Balanced

0.85

Correlation Coefficient

Brandywineglobal  Plumb Balanced

Very poor diversification

The 3 months correlation between Brandywineglobal and Plumb is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Brandywineglobal Corporate and Plumb Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced and Brandywineglobal 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 Brandywineglobal Corporate are associated (or correlated) with Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Brandywineglobal i.e., Brandywineglobal and Plumb Balanced go up and down completely randomly.

Pair Corralation between Brandywineglobal and Plumb Balanced

Assuming the 90 days horizon Brandywineglobal is expected to generate 1.97 times less return on investment than Plumb Balanced. But when comparing it to its historical volatility, Brandywineglobal Corporate is 3.03 times less risky than Plumb Balanced. It trades about 0.19 of its potential returns per unit of risk. Plumb Balanced Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,729  in Plumb Balanced Fund on September 14, 2024 and sell it today you would earn a total of  1,355  from holding Plumb Balanced Fund or generate 49.65% return on investment over 90 days.

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

Brandywineglobal Corporate  vs.  Plumb Balanced Fund

Brandywineglobal C

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywineglobal Corporate are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Brandywineglobal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Plumb Balanced

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plumb Balanced Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Plumb Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brandywineglobal and Plumb Balanced

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

The idea behind Brandywineglobal Corporate and Plumb Balanced Fund 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.