Correlation Between Cambria Global and Global X

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

Diversification Opportunities for Cambria Global and Global X

-0.17

Correlation Coefficient

Cambria Global  Global X

Good diversification

The 3 months correlation between Cambria and Global is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Asset and Global X NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ 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 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 NASDAQ has no effect on the direction of Cambria Global i.e., Cambria Global and Global X go up and down completely randomly.

Pair Corralation between Cambria Global and Global X

Considering the 90-day investment horizon Cambria Global Asset is expected to generate 0.65 times more return on investment than Global X. However, Cambria Global Asset is 1.55 times less risky than Global X. It trades about 0.18 of its potential returns per unit of risk. Global X NASDAQ is currently generating about 0.06 per unit of risk. If you would invest  2,845  in Cambria Global Asset on October 24, 2024 and sell it today you would earn a total of  48.00  from holding Cambria Global Asset or generate 1.69% return on investment over 90 days.

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

Cambria Global Asset  vs.  Global X NASDAQ

Cambria Global Asset

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Global Asset are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cambria Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global X NASDAQ

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X NASDAQ are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cambria Global and Global X

The main advantage of trading using opposite Cambria Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Global 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 Global Asset and Global X NASDAQ 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.