Correlation Between Oshaughnessy Market and Brandes Emerging

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

By analyzing existing cross correlation between Oshaughnessy Market Leaders and Brandes Emerging Markets, you can compare the effects of market volatilities on Oshaughnessy Market and Brandes Emerging 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 Oshaughnessy Market with a short position of Brandes Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oshaughnessy Market and Brandes Emerging.

Diversification Opportunities for Oshaughnessy Market and Brandes Emerging

0.97

Correlation Coefficient

Oshaughnessy Market  Brandes Emerging

Almost no diversification

The 3 months correlation between Oshaughnessy and Brandes is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Oshaughnessy Market Leaders and Brandes Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Emerging Markets and Oshaughnessy Market 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 Oshaughnessy Market Leaders are associated (or correlated) with Brandes Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Emerging Markets has no effect on the direction of Oshaughnessy Market i.e., Oshaughnessy Market and Brandes Emerging go up and down completely randomly.

Pair Corralation between Oshaughnessy Market and Brandes Emerging

Assuming the 90 days horizon Oshaughnessy Market Leaders is expected to under-perform the Brandes Emerging. In addition to that, Oshaughnessy Market is 1.87 times more volatile than Brandes Emerging Markets. It trades about -0.05 of its total potential returns per unit of risk. Brandes Emerging Markets is currently generating about 0.14 per unit of volatility. If you would invest  1,025  in Brandes Emerging Markets on May 4, 2025 and sell it today you would earn a total of  14.00  from holding Brandes Emerging Markets or generate 1.37% return on investment over 90 days.

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

Oshaughnessy Market Leaders  vs.  Brandes Emerging Markets

Oshaughnessy Market

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oshaughnessy Market Leaders are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Oshaughnessy Market may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Brandes Emerging Markets

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes Emerging Markets are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Brandes Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oshaughnessy Market and Brandes Emerging

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

The idea behind Oshaughnessy Market Leaders and Brandes Emerging Markets 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.