Correlation Between Cambiar International and Causeway International
Can any of the company-specific risk be diversified away by investing in both Cambiar International and Causeway International 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 Cambiar International and Causeway International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambiar International Equity and Causeway International Value, you can compare the effects of market volatilities on Cambiar International and Causeway International 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 Cambiar International with a short position of Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar International and Causeway International.
Diversification Opportunities for Cambiar International and Causeway International
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cambiar and Causeway is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar International Equity and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and Cambiar International 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 Cambiar International Equity are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Cambiar International i.e., Cambiar International and Causeway International go up and down completely randomly.
Pair Corralation between Cambiar International and Causeway International
Assuming the 90 days horizon Cambiar International Equity is expected to generate 0.95 times more return on investment than Causeway International. However, Cambiar International Equity is 1.05 times less risky than Causeway International. It trades about -0.02 of its potential returns per unit of risk. Causeway International Value is currently generating about -0.03 per unit of risk. If you would invest 2,724 in Cambiar International Equity on September 6, 2024 and sell it today you would lose (34.00) from holding Cambiar International Equity or give up 1.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.44% |
Values | Daily Returns |
Cambiar International Equity vs. Causeway International Value
Performance |
Timeline |
Cambiar International |
Causeway International |
Cambiar International and Causeway International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cambiar International and Causeway International
The main advantage of trading using opposite Cambiar International and Causeway International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambiar International position performs unexpectedly, Causeway International 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 Causeway International will offset losses from the drop in Causeway International's long position.Cambiar International vs. Causeway Emerging Markets | Cambiar International vs. Cambiar Small Cap | Cambiar International vs. Pimco Short Term Fund | Cambiar International vs. Cambiar Opportunity Fund |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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