Correlation Between Cambria Global and Pacer WealthShield

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

Diversification Opportunities for Cambria Global and Pacer WealthShield

0.69

Correlation Coefficient

Cambria Global  Pacer WealthShield

Poor diversification

The 3 months correlation between Cambria and Pacer is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Momentum and Pacer WealthShield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer WealthShield 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 Pacer WealthShield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer WealthShield has no effect on the direction of Cambria Global i.e., Cambria Global and Pacer WealthShield go up and down completely randomly.

Pair Corralation between Cambria Global and Pacer WealthShield

Given the investment horizon of 90 days Cambria Global Momentum is expected to under-perform the Pacer WealthShield. But the etf apears to be less risky and, when comparing its historical volatility, Cambria Global Momentum is 1.02 times less risky than Pacer WealthShield. The etf trades about -0.07 of its potential returns per unit of risk. The Pacer WealthShield is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,143  in Pacer WealthShield on December 1, 2024 and sell it today you would lose (79.00) from holding Pacer WealthShield or give up 2.51% of portfolio value over 90 days.

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

Cambria Global Momentum  vs.  Pacer WealthShield

Cambria Global Momentum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cambria Global Momentum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cambria Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pacer WealthShield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer WealthShield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pacer WealthShield is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cambria Global and Pacer WealthShield

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

The idea behind Cambria Global Momentum and Pacer WealthShield 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.