Correlation Between WisdomTree International and Cambria Foreign

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

By analyzing existing cross correlation between WisdomTree International MidCap and Cambria Foreign Shareholder, you can compare the effects of market volatilities on WisdomTree International and Cambria Foreign 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 WisdomTree International with a short position of Cambria Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and Cambria Foreign.

Diversification Opportunities for WisdomTree International and Cambria Foreign

0.92

Correlation Coefficient

WisdomTree International  Cambria Foreign

Almost no diversification

The 3 months correlation between WisdomTree and Cambria is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International MidCa and Cambria Foreign Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Foreign Shar and WisdomTree 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 WisdomTree International MidCap are associated (or correlated) with Cambria Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Foreign Shar has no effect on the direction of WisdomTree International i.e., WisdomTree International and Cambria Foreign go up and down completely randomly.

Pair Corralation between WisdomTree International and Cambria Foreign

Considering the 90-day investment horizon WisdomTree International MidCap is expected to generate 0.85 times more return on investment than Cambria Foreign. However, WisdomTree International MidCap is 1.17 times less risky than Cambria Foreign. It trades about -0.08 of its potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about -0.07 per unit of risk. If you would invest  6,540  in WisdomTree International MidCap on September 14, 2024 and sell it today you would lose (257.00) from holding WisdomTree International MidCap or give up 3.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

WisdomTree International MidCa  vs.  Cambria Foreign Shareholder

WisdomTree International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree International MidCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, WisdomTree International is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Cambria Foreign Shar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambria Foreign Shareholder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Cambria Foreign is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree International and Cambria Foreign

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

The idea behind WisdomTree International MidCap and Cambria Foreign Shareholder 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 Stocks Directory module to find actively traded stocks across global markets.