Correlation Between Cambria Global and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Cambria Global and FT Cboe 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 FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Global Momentum and FT Cboe Vest, you can compare the effects of market volatilities on Cambria Global and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Global and FT Cboe.
Diversification Opportunities for Cambria Global and FT Cboe
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cambria and DNOV is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Momentum and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 Momentum are associated (or correlated) with FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Cambria Global i.e., Cambria Global and FT Cboe go up and down completely randomly.
Pair Corralation between Cambria Global and FT Cboe
Given the investment horizon of 90 days Cambria Global Momentum is expected to generate 1.5 times more return on investment than FT Cboe. However, Cambria Global is 1.5 times more volatile than FT Cboe Vest. It trades about -0.01 of its potential returns per unit of risk. FT Cboe Vest is currently generating about -0.06 per unit of risk. If you would invest 2,891 in Cambria Global Momentum on December 27, 2024 and sell it today you would lose (19.00) from holding Cambria Global Momentum or give up 0.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Cambria Global Momentum vs. FT Cboe Vest
Performance |
Timeline |
Cambria Global Momentum |
FT Cboe Vest |
Cambria Global and FT Cboe Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cambria Global and FT Cboe
The main advantage of trading using opposite Cambria Global and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Global position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.Cambria Global vs. Cambria Global Asset | Cambria Global vs. Cambria Global Value | Cambria Global vs. Cambria Foreign Shareholder | Cambria Global vs. Cambria Value and |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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