Correlation Between SPDR Portfolio and Cambria Shareholder

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

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

Diversification Opportunities for SPDR Portfolio and Cambria Shareholder

0.8

Correlation Coefficient

SPDR Portfolio  Cambria Shareholder

Very poor diversification

The 3 months correlation between SPDR and Cambria is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Cambria Shareholder Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Shareholder Yield and SPDR Portfolio 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 SPDR Portfolio SP are associated (or correlated) with Cambria Shareholder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Shareholder Yield has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Cambria Shareholder go up and down completely randomly.

Pair Corralation between SPDR Portfolio and Cambria Shareholder

Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 0.87 times more return on investment than Cambria Shareholder. However, SPDR Portfolio SP is 1.14 times less risky than Cambria Shareholder. It trades about -0.03 of its potential returns per unit of risk. Cambria Shareholder Yield is currently generating about -0.23 per unit of risk. If you would invest  4,584  in SPDR Portfolio SP on December 3, 2024 and sell it today you would lose (81.00) from holding SPDR Portfolio SP or give up 1.77% of portfolio value over 90 days.

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

SPDR Portfolio SP  vs.  Cambria Shareholder Yield

SPDR Portfolio SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Portfolio SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPDR Portfolio is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cambria Shareholder Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cambria Shareholder Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with SPDR Portfolio and Cambria Shareholder

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

The idea behind SPDR Portfolio SP and Cambria Shareholder Yield 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.