Correlation Between Cambria Value and DUDE

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

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

Diversification Opportunities for Cambria Value and DUDE

-0.27

Correlation Coefficient

Cambria Value  DUDE

Very good diversification

The 3 months correlation between Cambria and DUDE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Value and and DUDE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUDE and Cambria Value 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 Value and are associated (or correlated) with DUDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUDE has no effect on the direction of Cambria Value i.e., Cambria Value and DUDE go up and down completely randomly.

Pair Corralation between Cambria Value and DUDE

If you would invest  2,173  in DUDE on October 25, 2024 and sell it today you would earn a total of  0.00  from holding DUDE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

Cambria Value and  vs.  DUDE

Cambria Value

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Value and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Cambria Value is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

DUDE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cambria Value and DUDE

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

The idea behind Cambria Value and and DUDE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.