Correlation Between Invesco KBW and Cambria Global
Can any of the company-specific risk be diversified away by investing in both Invesco KBW and Cambria 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 Invesco KBW and Cambria Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco KBW High and Cambria Global Momentum, you can compare the effects of market volatilities on Invesco KBW and Cambria 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 Invesco KBW with a short position of Cambria Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco KBW and Cambria Global.
Diversification Opportunities for Invesco KBW and Cambria Global
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Cambria is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Invesco KBW High and Cambria Global Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Global Momentum and Invesco KBW 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 Invesco KBW High are associated (or correlated) with Cambria Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Global Momentum has no effect on the direction of Invesco KBW i.e., Invesco KBW and Cambria Global go up and down completely randomly.
Pair Corralation between Invesco KBW and Cambria Global
Given the investment horizon of 90 days Invesco KBW is expected to generate 2.79 times less return on investment than Cambria Global. In addition to that, Invesco KBW is 1.05 times more volatile than Cambria Global Momentum. It trades about 0.04 of its total potential returns per unit of risk. Cambria Global Momentum is currently generating about 0.11 per unit of volatility. If you would invest 2,859 in Cambria Global Momentum on February 28, 2024 and sell it today you would earn a total of 51.00 from holding Cambria Global Momentum or generate 1.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco KBW High vs. Cambria Global Momentum
Performance |
Timeline |
Invesco KBW High |
Cambria Global Momentum |
Invesco KBW and Cambria Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco KBW and Cambria Global
The main advantage of trading using opposite Invesco KBW and Cambria Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco KBW position performs unexpectedly, Cambria 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 Cambria Global will offset losses from the drop in Cambria Global's long position.Invesco KBW vs. Vanguard Industrials Index | Invesco KBW vs. Vanguard Consumer Discretionary | Invesco KBW vs. Vanguard Materials Index | Invesco KBW vs. Vanguard Health Care |
Cambria Global vs. Cabana Target Drawdown | Cambria Global vs. ETC 6 Meridian | Cambria Global vs. Timothy Plan International | Cambria Global vs. HUMANA INC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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