Correlation Between Cambria Global and Cambria Shareholder

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

Diversification Opportunities for Cambria Global and Cambria Shareholder

0.75

Correlation Coefficient

Cambria Global  Cambria Shareholder

Poor diversification

The 3 months correlation between Cambria and Cambria is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Momentum and Cambria Shareholder Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Shareholder Yield 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 Shareholder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Shareholder Yield has no effect on the direction of Cambria Global i.e., Cambria Global and Cambria Shareholder go up and down completely randomly.

Pair Corralation between Cambria Global and Cambria Shareholder

Given the investment horizon of 90 days Cambria Global Momentum is expected to generate 0.85 times more return on investment than Cambria Shareholder. However, Cambria Global Momentum is 1.17 times less risky than Cambria Shareholder. It trades about -0.08 of its potential returns per unit of risk. Cambria Shareholder Yield is currently generating about -0.23 per unit of risk. If you would invest  3,009  in Cambria Global Momentum on December 3, 2024 and sell it today you would lose (111.00) from holding Cambria Global Momentum or give up 3.69% 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.  Cambria Shareholder Yield

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.

Cambria Shareholder Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cambria Shareholder Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Cambria Global and Cambria Shareholder

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

The idea behind Cambria Global Momentum and Cambria Shareholder Yield 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.