Correlation Between Cambria Global and Cambria Emerging

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

Diversification Opportunities for Cambria Global and Cambria Emerging

-0.09

Correlation Coefficient

Cambria Global  Cambria Emerging

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 Global Momentum and Cambria Emerging Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Emerging Sha 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 Cambria Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Emerging Sha has no effect on the direction of Cambria Global i.e., Cambria Global and Cambria Emerging go up and down completely randomly.

Pair Corralation between Cambria Global and Cambria Emerging

Given the investment horizon of 90 days Cambria Global is expected to generate 1.0 times less return on investment than Cambria Emerging. But when comparing it to its historical volatility, Cambria Global Momentum is 1.03 times less risky than Cambria Emerging. It trades about 0.06 of its potential returns per unit of risk. Cambria Emerging Shareholder is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,920  in Cambria Emerging Shareholder on September 13, 2024 and sell it today you would earn a total of  405.00  from holding Cambria Emerging Shareholder or generate 13.87% return on investment over 90 days.

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

Cambria Global Momentum  vs.  Cambria Emerging Shareholder

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.

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.

Pair Trading with Cambria Global and Cambria Emerging

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

The idea behind Cambria Global Momentum and Cambria Emerging Shareholder 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.