Correlation Between Cambria Emerging and Cambria Foreign

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

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

Diversification Opportunities for Cambria Emerging and Cambria Foreign

0.92

Correlation Coefficient

Cambria Emerging  Cambria Foreign

Almost no diversification

The 3 months correlation between Cambria and Cambria is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Emerging Shareholder and Cambria Foreign Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Foreign Shar and Cambria Emerging 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 Cambria Emerging Shareholder are associated (or correlated) with Cambria Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Foreign Shar has no effect on the direction of Cambria Emerging i.e., Cambria Emerging and Cambria Foreign go up and down completely randomly.

Pair Corralation between Cambria Emerging and Cambria Foreign

Given the investment horizon of 90 days Cambria Emerging is expected to generate 1.06 times less return on investment than Cambria Foreign. But when comparing it to its historical volatility, Cambria Emerging Shareholder is 1.07 times less risky than Cambria Foreign. It trades about 0.26 of its potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,665  in Cambria Foreign Shareholder on February 12, 2024 and sell it today you would earn a total of  116.00  from holding Cambria Foreign Shareholder or generate 4.35% return on investment over 90 days.

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

Cambria Emerging Shareholder  vs.  Cambria Foreign Shareholder

Cambria Emerging Sha

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Emerging Shareholder are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal essential indicators, Cambria Emerging may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Cambria Foreign Shar

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Foreign Shareholder are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Cambria Foreign may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Cambria Emerging and Cambria Foreign

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

The idea behind Cambria Emerging Shareholder and Cambria Foreign Shareholder 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.