Correlation Between Dimensional ETF and Cambria Foreign

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

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

Diversification Opportunities for Dimensional ETF and Cambria Foreign

0.98

Correlation Coefficient

Dimensional ETF  Cambria Foreign

Almost no diversification

The 3 months correlation between Dimensional and Cambria is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust 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 Dimensional ETF 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 Dimensional ETF Trust 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 Dimensional ETF i.e., Dimensional ETF and Cambria Foreign go up and down completely randomly.

Pair Corralation between Dimensional ETF and Cambria Foreign

Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 1.08 times more return on investment than Cambria Foreign. However, Dimensional ETF is 1.08 times more volatile than Cambria Foreign Shareholder. It trades about 0.2 of its potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about 0.14 per unit of risk. If you would invest  2,652  in Dimensional ETF Trust on December 30, 2024 and sell it today you would earn a total of  299.00  from holding Dimensional ETF Trust or generate 11.27% return on investment over 90 days.

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

Dimensional ETF Trust  vs.  Cambria Foreign Shareholder

Dimensional ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dimensional ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cambria Foreign Shar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Foreign Shareholder are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Cambria Foreign may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dimensional ETF and Cambria Foreign

The main advantage of trading using opposite Dimensional ETF and Cambria Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF 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 Dimensional ETF Trust 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.