Correlation Between IShares International and Cambria Foreign

Can any of the company-specific risk be diversified away by investing in both IShares 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 IShares 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 iShares International Developed and Cambria Foreign Shareholder, you can compare the effects of market volatilities on IShares 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 IShares International with a short position of Cambria Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and Cambria Foreign.

Diversification Opportunities for IShares International and Cambria Foreign

0.95

Correlation Coefficient

IShares International  Cambria Foreign

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 International Develope 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 IShares 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 iShares International Developed 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 IShares International i.e., IShares International and Cambria Foreign go up and down completely randomly.

Pair Corralation between IShares International and Cambria Foreign

Given the investment horizon of 90 days iShares International Developed is expected to generate 1.03 times more return on investment than Cambria Foreign. However, IShares International is 1.03 times more volatile than Cambria Foreign Shareholder. It trades about 0.21 of its potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about 0.18 per unit of risk. If you would invest  3,406  in iShares International Developed on December 22, 2024 and sell it today you would earn a total of  359.00  from holding iShares International Developed or generate 10.54% return on investment over 90 days.

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

iShares International Develope  vs.  Cambria Foreign Shareholder

iShares International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares International Developed are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, IShares International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cambria Foreign Shar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Foreign Shareholder are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Cambria Foreign may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares International and Cambria Foreign

The main advantage of trading using opposite IShares International and Cambria Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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 iShares International Developed 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.