Correlation Between Cambiar Smid and Cambiar International

Can any of the company-specific risk be diversified away by investing in both Cambiar Smid 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 Smid 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 Smid Fund and Cambiar International Equity, you can compare the effects of market volatilities on Cambiar Smid 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 Smid with a short position of Cambiar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Smid and Cambiar International.

Diversification Opportunities for Cambiar Smid and Cambiar International

-0.04

Correlation Coefficient

Cambiar Smid  Cambiar International

Good diversification

The 3 months correlation between Cambiar and Cambiar is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Smid Fund 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 Smid 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 Smid Fund 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 Smid i.e., Cambiar Smid and Cambiar International go up and down completely randomly.

Pair Corralation between Cambiar Smid and Cambiar International

Assuming the 90 days horizon Cambiar Smid Fund is expected to under-perform the Cambiar International. In addition to that, Cambiar Smid is 1.16 times more volatile than Cambiar International Equity. It trades about -0.05 of its total potential returns per unit of risk. Cambiar International Equity is currently generating about 0.21 per unit of volatility. If you would invest  2,591  in Cambiar International Equity on December 24, 2024 and sell it today you would earn a total of  254.00  from holding Cambiar International Equity or generate 9.8% return on investment over 90 days.

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

Cambiar Smid Fund  vs.  Cambiar International Equity

Cambiar Smid

Risk-Adjusted Performance

Very Weak

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

Cambiar International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar International Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cambiar International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cambiar Smid and Cambiar International

The main advantage of trading using opposite Cambiar Smid and Cambiar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambiar Smid 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 Smid Fund 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.