Correlation Between Cambiar Smid and Fixed Income

Can any of the company-specific risk be diversified away by investing in both Cambiar Smid and Fixed Income 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 Fixed Income 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 The Fixed Income, you can compare the effects of market volatilities on Cambiar Smid and Fixed Income 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 Fixed Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Smid and Fixed Income.

Diversification Opportunities for Cambiar Smid and Fixed Income

0.43

Correlation Coefficient

Cambiar Smid  Fixed Income

Very weak diversification

The 3 months correlation between Cambiar and Fixed is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Smid Fund and The Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fixed Income 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 Fixed Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fixed Income has no effect on the direction of Cambiar Smid i.e., Cambiar Smid and Fixed Income go up and down completely randomly.

Pair Corralation between Cambiar Smid and Fixed Income

Assuming the 90 days horizon Cambiar Smid Fund is expected to under-perform the Fixed Income. In addition to that, Cambiar Smid is 2.9 times more volatile than The Fixed Income. It trades about 0.0 of its total potential returns per unit of risk. The Fixed Income is currently generating about 0.0 per unit of volatility. If you would invest  730.00  in The Fixed Income on December 28, 2024 and sell it today you would earn a total of  0.00  from holding The Fixed Income or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Cambiar Smid Fund  vs.  The Fixed Income

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.

Fixed Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Fixed Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fixed Income 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 Smid and Fixed Income

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

The idea behind Cambiar Smid Fund and The Fixed Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.