Correlation Between Cambria Cannabis and Invesco Global

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

By analyzing existing cross correlation between Cambria Cannabis ETF and Invesco Global Listed, you can compare the effects of market volatilities on Cambria Cannabis and Invesco 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 Cambria Cannabis with a short position of Invesco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Cannabis and Invesco Global.

Diversification Opportunities for Cambria Cannabis and Invesco Global

-0.72

Correlation Coefficient

Cambria Cannabis  Invesco Global

Pay attention - limited upside

The 3 months correlation between Cambria and Invesco is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Cannabis ETF and Invesco Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Listed and Cambria Cannabis 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 Cannabis ETF are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Listed has no effect on the direction of Cambria Cannabis i.e., Cambria Cannabis and Invesco Global go up and down completely randomly.

Pair Corralation between Cambria Cannabis and Invesco Global

Given the investment horizon of 90 days Cambria Cannabis ETF is expected to under-perform the Invesco Global. In addition to that, Cambria Cannabis is 2.21 times more volatile than Invesco Global Listed. It trades about -0.09 of its total potential returns per unit of risk. Invesco Global Listed is currently generating about 0.1 per unit of volatility. If you would invest  6,663  in Invesco Global Listed on September 15, 2024 and sell it today you would earn a total of  412.00  from holding Invesco Global Listed or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Cambria Cannabis ETF  vs.  Invesco Global Listed

Cambria Cannabis ETF

Risk-Adjusted Performance

0 of 100

Very Weak

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

Invesco Global Listed

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Listed are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco Global is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cambria Cannabis and Invesco Global

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

The idea behind Cambria Cannabis ETF and Invesco Global Listed 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.