Correlation Between Cambria Emerging and Global X

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

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

Diversification Opportunities for Cambria Emerging and Global X

0.75

Correlation Coefficient

Cambria Emerging  Global X

Poor diversification

The 3 months correlation between Cambria and Global is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Emerging Shareholder and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and Cambria 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 Cambria Emerging Shareholder are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of Cambria Emerging i.e., Cambria Emerging and Global X go up and down completely randomly.

Pair Corralation between Cambria Emerging and Global X

Given the investment horizon of 90 days Cambria Emerging Shareholder is expected to generate 1.26 times more return on investment than Global X. However, Cambria Emerging is 1.26 times more volatile than Global X MSCI. It trades about -0.02 of its potential returns per unit of risk. Global X MSCI is currently generating about -0.09 per unit of risk. If you would invest  3,335  in Cambria Emerging Shareholder on September 14, 2024 and sell it today you would lose (51.00) from holding Cambria Emerging Shareholder or give up 1.53% of portfolio value over 90 days.

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

Cambria Emerging Shareholder  vs.  Global X MSCI

Cambria Emerging Sha

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global X is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cambria Emerging and Global X

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

The idea behind Cambria Emerging Shareholder and Global X MSCI 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.