Correlation Between Cambria Emerging and Cambria Global

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

Diversification Opportunities for Cambria Emerging and Cambria Global

-0.09

Correlation Coefficient

Cambria Emerging  Cambria Global

Good diversification

The 3 months correlation between Cambria and Cambria is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Emerging Shareholder and Cambria Global Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Global Momentum 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 Cambria Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Global Momentum has no effect on the direction of Cambria Emerging i.e., Cambria Emerging and Cambria Global go up and down completely randomly.

Pair Corralation between Cambria Emerging and Cambria Global

Given the investment horizon of 90 days Cambria Emerging is expected to generate 6.72 times less return on investment than Cambria Global. In addition to that, Cambria Emerging is 1.32 times more volatile than Cambria Global Momentum. It trades about 0.01 of its total potential returns per unit of risk. Cambria Global Momentum is currently generating about 0.11 per unit of volatility. If you would invest  2,858  in Cambria Global Momentum on September 13, 2024 and sell it today you would earn a total of  164.00  from holding Cambria Global Momentum or generate 5.74% return on investment over 90 days.

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

Cambria Emerging Shareholder  vs.  Cambria Global Momentum

Cambria Emerging Sha

Risk-Adjusted Performance

0 of 100

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cambria Global Momentum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Global Momentum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cambria Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cambria Emerging and Cambria Global

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

The idea behind Cambria Emerging Shareholder and Cambria Global Momentum 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.