Correlation Between Cambiar Small and Cambiar International

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

By analyzing existing cross correlation between Cambiar Small Cap and Cambiar International Equity, you can compare the effects of market volatilities on Cambiar Small and Cambiar 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 Small with a short position of Cambiar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Small and Cambiar International.

Diversification Opportunities for Cambiar Small and Cambiar International

-0.75

Correlation Coefficient

Cambiar Small  Cambiar International

Pay attention - limited upside

The 3 months correlation between Cambiar and Cambiar is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Small Cap and Cambiar International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar International and Cambiar Small 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 Small Cap are associated (or correlated) with Cambiar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar International has no effect on the direction of Cambiar Small i.e., Cambiar Small and Cambiar International go up and down completely randomly.

Pair Corralation between Cambiar Small and Cambiar International

Assuming the 90 days horizon Cambiar Small Cap is expected to generate 1.36 times more return on investment than Cambiar International. However, Cambiar Small is 1.36 times more volatile than Cambiar International Equity. It trades about 0.15 of its potential returns per unit of risk. Cambiar International Equity is currently generating about -0.05 per unit of risk. If you would invest  1,641  in Cambiar Small Cap on September 3, 2024 and sell it today you would earn a total of  176.00  from holding Cambiar Small Cap or generate 10.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cambiar Small Cap  vs.  Cambiar International Equity

Cambiar Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cambiar Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cambiar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambiar International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Cambiar International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cambiar Small and Cambiar International

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

The idea behind Cambiar Small Cap and Cambiar International Equity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.