Correlation Between Cambria Global and IQ 50

Can any of the company-specific risk be diversified away by investing in both Cambria Global and IQ 50 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 IQ 50 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 IQ 50 Percent, you can compare the effects of market volatilities on Cambria Global and IQ 50 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 IQ 50. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Global and IQ 50.

Diversification Opportunities for Cambria Global and IQ 50

0.46

Correlation Coefficient

Cambria Global  IQ 50

Very weak diversification

The 3 months correlation between Cambria and HFXI is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Asset and IQ 50 Percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ 50 Percent 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 IQ 50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ 50 Percent has no effect on the direction of Cambria Global i.e., Cambria Global and IQ 50 go up and down completely randomly.

Pair Corralation between Cambria Global and IQ 50

Considering the 90-day investment horizon Cambria Global is expected to generate 11.13 times less return on investment than IQ 50. But when comparing it to its historical volatility, Cambria Global Asset is 1.22 times less risky than IQ 50. It trades about 0.02 of its potential returns per unit of risk. IQ 50 Percent is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,643  in IQ 50 Percent on September 17, 2024 and sell it today you would earn a total of  44.00  from holding IQ 50 Percent or generate 1.66% return on investment over 90 days.

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

Cambria Global Asset  vs.  IQ 50 Percent

Cambria Global Asset

Risk-Adjusted Performance

0 of 100

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.

IQ 50 Percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQ 50 Percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IQ 50 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cambria Global and IQ 50

The main advantage of trading using opposite Cambria Global and IQ 50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Global position performs unexpectedly, IQ 50 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 IQ 50 will offset losses from the drop in IQ 50's long position.

The idea behind Cambria Global Asset and IQ 50 Percent 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.