Correlation Between Cambria Shareholder and Invesco Dividend

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

Diversification Opportunities for Cambria Shareholder and Invesco Dividend

0.93

Correlation Coefficient

Cambria Shareholder  Invesco Dividend

Almost no diversification

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

Pair Corralation between Cambria Shareholder and Invesco Dividend

Given the investment horizon of 90 days Cambria Shareholder Yield is expected to under-perform the Invesco Dividend. In addition to that, Cambria Shareholder is 1.72 times more volatile than Invesco Dividend Achievers. It trades about -0.07 of its total potential returns per unit of risk. Invesco Dividend Achievers is currently generating about -0.06 per unit of volatility. If you would invest  4,737  in Invesco Dividend Achievers on September 14, 2024 and sell it today you would lose (26.00) from holding Invesco Dividend Achievers or give up 0.55% of portfolio value over 90 days.

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

Cambria Shareholder Yield  vs.  Invesco Dividend Achievers

Cambria Shareholder Yield

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Shareholder Yield are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Cambria Shareholder is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco Dividend Ach

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dividend Achievers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Invesco Dividend is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cambria Shareholder and Invesco Dividend

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

The idea behind Cambria Shareholder Yield and Invesco Dividend Achievers 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.