Correlation Between BSAE and Cambria
Can any of the company-specific risk be diversified away by investing in both BSAE and Cambria 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 BSAE and Cambria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BSAE and Cambria, you can compare the effects of market volatilities on BSAE and Cambria 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 BSAE with a short position of Cambria. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSAE and Cambria.
Diversification Opportunities for BSAE and Cambria
Pay attention - limited upside
The 3 months correlation between BSAE and Cambria is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BSAE and Cambria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria and BSAE 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 BSAE are associated (or correlated) with Cambria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria has no effect on the direction of BSAE i.e., BSAE and Cambria go up and down completely randomly.
Pair Corralation between BSAE and Cambria
If you would invest 0.00 in BSAE on January 25, 2024 and sell it today you would earn a total of 0.00 from holding BSAE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.43% |
| Values | Daily Returns |
BSAE vs. Cambria
Performance |
| Timeline |
| BSAE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cambria |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
BSAE and Cambria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSAE and Cambria
The main advantage of trading using opposite BSAE and Cambria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSAE position performs unexpectedly, Cambria 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 Cambria will offset losses from the drop in Cambria's long position.The idea behind BSAE and Cambria 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.Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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