Correlation Between Cambria Global and SPDR Bloomberg

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

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

Diversification Opportunities for Cambria Global and SPDR Bloomberg

0.75

Correlation Coefficient

Cambria Global  SPDR Bloomberg

Poor diversification

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

Pair Corralation between Cambria Global and SPDR Bloomberg

Considering the 90-day investment horizon Cambria Global Asset is expected to generate 1.23 times more return on investment than SPDR Bloomberg. However, Cambria Global is 1.23 times more volatile than SPDR Bloomberg Emerging. It trades about 0.06 of its potential returns per unit of risk. SPDR Bloomberg Emerging is currently generating about 0.04 per unit of risk. If you would invest  2,473  in Cambria Global Asset on December 8, 2024 and sell it today you would earn a total of  435.00  from holding Cambria Global Asset or generate 17.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Cambria Global Asset  vs.  SPDR Bloomberg Emerging

Cambria Global Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cambria Global Asset has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cambria Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SPDR Bloomberg Emerging

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Emerging are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SPDR Bloomberg is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cambria Global and SPDR Bloomberg

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

The idea behind Cambria Global Asset and SPDR Bloomberg Emerging 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.