Correlation Between Cambria Shareholder and First Trust

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

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

Diversification Opportunities for Cambria Shareholder and First Trust

0.09

Correlation Coefficient

Cambria Shareholder  First Trust

Significant diversification

The 3 months correlation between Cambria and First is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Shareholder Yield and First Trust Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Developed and Cambria Shareholder 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 Cambria Shareholder Yield are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Developed has no effect on the direction of Cambria Shareholder i.e., Cambria Shareholder and First Trust go up and down completely randomly.

Pair Corralation between Cambria Shareholder and First Trust

Given the investment horizon of 90 days Cambria Shareholder Yield is expected to generate 1.03 times more return on investment than First Trust. However, Cambria Shareholder is 1.03 times more volatile than First Trust Developed. It trades about -0.07 of its potential returns per unit of risk. First Trust Developed is currently generating about -0.12 per unit of risk. If you would invest  7,214  in Cambria Shareholder Yield on September 30, 2024 and sell it today you would lose (354.00) from holding Cambria Shareholder Yield or give up 4.91% of portfolio value over 90 days.

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

Cambria Shareholder Yield  vs.  First Trust Developed

Cambria Shareholder Yield

Risk-Adjusted Performance

0 of 100

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 rather sound essential indicators, Cambria Shareholder is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

First Trust Developed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Developed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Cambria Shareholder and First Trust

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

The idea behind Cambria Shareholder Yield and First Trust Developed 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.