Correlation Between ALPS International and Cambria Foreign

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

By analyzing existing cross correlation between ALPS International Sector and Cambria Foreign Shareholder, you can compare the effects of market volatilities on ALPS International and Cambria Foreign 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 ALPS International with a short position of Cambria Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPS International and Cambria Foreign.

Diversification Opportunities for ALPS International and Cambria Foreign

0.95

Correlation Coefficient

ALPS International  Cambria Foreign

Almost no diversification

The 3 months correlation between ALPS and Cambria is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ALPS International Sector and Cambria Foreign Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Foreign Shar and ALPS International 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 ALPS International Sector are associated (or correlated) with Cambria Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Foreign Shar has no effect on the direction of ALPS International i.e., ALPS International and Cambria Foreign go up and down completely randomly.

Pair Corralation between ALPS International and Cambria Foreign

Given the investment horizon of 90 days ALPS International Sector is expected to generate 1.13 times more return on investment than Cambria Foreign. However, ALPS International is 1.13 times more volatile than Cambria Foreign Shareholder. It trades about -0.12 of its potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about -0.27 per unit of risk. If you would invest  2,911  in ALPS International Sector on September 21, 2024 and sell it today you would lose (67.00) from holding ALPS International Sector or give up 2.3% of portfolio value over 90 days.

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

ALPS International Sector  vs.  Cambria Foreign Shareholder

ALPS International Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALPS International Sector has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Cambria Foreign Shar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambria Foreign Shareholder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with ALPS International and Cambria Foreign

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

The idea behind ALPS International Sector and Cambria Foreign 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.