Correlation Between Simplify Exchange and Cambria Value

Can any of the company-specific risk be diversified away by investing in both Simplify Exchange and Cambria Value 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 Simplify Exchange and Cambria Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Simplify Exchange Traded and Cambria Value and, you can compare the effects of market volatilities on Simplify Exchange and Cambria Value 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 Simplify Exchange with a short position of Cambria Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and Cambria Value.

Diversification Opportunities for Simplify Exchange and Cambria Value

0.64

Correlation Coefficient

Simplify Exchange  Cambria Value

Poor diversification

The 3 months correlation between Simplify and Cambria is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and Cambria Value and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Value and Simplify Exchange 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 Simplify Exchange Traded are associated (or correlated) with Cambria Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Value has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and Cambria Value go up and down completely randomly.

Pair Corralation between Simplify Exchange and Cambria Value

Given the investment horizon of 90 days Simplify Exchange Traded is expected to under-perform the Cambria Value. But the etf apears to be less risky and, when comparing its historical volatility, Simplify Exchange Traded is 1.29 times less risky than Cambria Value. The etf trades about -0.09 of its potential returns per unit of risk. The Cambria Value and is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,942  in Cambria Value and on December 30, 2024 and sell it today you would lose (20.00) from holding Cambria Value and or give up 0.68% of portfolio value over 90 days.

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

Simplify Exchange Traded  vs.  Cambria Value and

Simplify Exchange Traded

Risk-Adjusted Performance

Very Weak

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

Cambria Value

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Simplify Exchange and Cambria Value

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

The idea behind Simplify Exchange Traded and Cambria Value and 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.