Correlation Between ALPS Emerging and Cambria Foreign

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

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

Diversification Opportunities for ALPS Emerging and Cambria Foreign

0.91

Correlation Coefficient

ALPS Emerging  Cambria Foreign

Almost no diversification

The 3 months correlation between ALPS and Cambria is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ALPS Emerging Sector 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 ALPS Emerging 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 ALPS Emerging Sector 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 ALPS Emerging i.e., ALPS Emerging and Cambria Foreign go up and down completely randomly.

Pair Corralation between ALPS Emerging and Cambria Foreign

Given the investment horizon of 90 days ALPS Emerging is expected to generate 1.24 times less return on investment than Cambria Foreign. But when comparing it to its historical volatility, ALPS Emerging Sector is 1.08 times less risky than Cambria Foreign. It trades about 0.04 of its potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,249  in Cambria Foreign Shareholder on October 1, 2024 and sell it today you would earn a total of  269.00  from holding Cambria Foreign Shareholder or generate 11.96% return on investment over 90 days.

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

ALPS Emerging Sector  vs.  Cambria Foreign Shareholder

ALPS Emerging Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALPS Emerging Sector has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

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 latest fragile performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with ALPS Emerging and Cambria Foreign

The main advantage of trading using opposite ALPS Emerging and Cambria Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALPS Emerging 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 ALPS Emerging Sector 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 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.