Correlation Between IShares International and Cambria Global

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

Diversification Opportunities for IShares International and Cambria Global

0.93

Correlation Coefficient

IShares International  Cambria Global

Almost no diversification

The 3 months correlation between IShares and Cambria is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and Cambria Global Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Global Value 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Global Value has no effect on the direction of IShares International i.e., IShares International and Cambria Global go up and down completely randomly.

Pair Corralation between IShares International and Cambria Global

Given the investment horizon of 90 days iShares International Developed is expected to generate 0.73 times more return on investment than Cambria Global. However, iShares International Developed is 1.37 times less risky than Cambria Global. It trades about -0.14 of its potential returns per unit of risk. Cambria Global Value is currently generating about -0.1 per unit of risk. If you would invest  3,643  in iShares International Developed on October 8, 2024 and sell it today you would lose (197.00) from holding iShares International Developed or give up 5.41% of portfolio value 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 Global Value

iShares International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares International Developed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, IShares International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cambria Global Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambria Global Value has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cambria Global is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares International and Cambria Global

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

The idea behind iShares International Developed and Cambria Global Value 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.