Correlation Between IShares Core and Cambria Emerging

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

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

Diversification Opportunities for IShares Core and Cambria Emerging

0.95

Correlation Coefficient

IShares Core  Cambria Emerging

Almost no diversification

The 3 months correlation between IShares and Cambria is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 IShares Core 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 iShares Core MSCI 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 IShares Core i.e., IShares Core and Cambria Emerging go up and down completely randomly.

Pair Corralation between IShares Core and Cambria Emerging

Given the investment horizon of 90 days iShares Core MSCI is expected to generate 0.91 times more return on investment than Cambria Emerging. However, iShares Core MSCI is 1.1 times less risky than Cambria Emerging. It trades about -0.12 of its potential returns per unit of risk. Cambria Emerging Shareholder is currently generating about -0.13 per unit of risk. If you would invest  5,713  in iShares Core MSCI on September 26, 2024 and sell it today you would lose (400.00) from holding iShares Core MSCI or give up 7.0% of portfolio value over 90 days.

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

iShares Core MSCI  vs.  Cambria Emerging Shareholder

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's primary 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 Emerging Sha

Risk-Adjusted Performance

0 of 100

Very 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 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 IShares Core and Cambria Emerging

The main advantage of trading using opposite IShares Core and Cambria Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 iShares Core MSCI 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.