Correlation Between Cambria Value and AdvisorShares Dorsey

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

Diversification Opportunities for Cambria Value and AdvisorShares Dorsey

-0.52

Correlation Coefficient

Cambria Value  AdvisorShares Dorsey

Excellent diversification

The 3 months correlation between Cambria and AdvisorShares is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Value and and AdvisorShares Dorsey Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Dorsey 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 AdvisorShares Dorsey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Dorsey has no effect on the direction of Cambria Value i.e., Cambria Value and AdvisorShares Dorsey go up and down completely randomly.

Pair Corralation between Cambria Value and AdvisorShares Dorsey

Given the investment horizon of 90 days Cambria Value and is expected to under-perform the AdvisorShares Dorsey. But the etf apears to be less risky and, when comparing its historical volatility, Cambria Value and is 1.63 times less risky than AdvisorShares Dorsey. The etf trades about -0.2 of its potential returns per unit of risk. The AdvisorShares Dorsey Wright is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  738.00  in AdvisorShares Dorsey Wright on September 19, 2024 and sell it today you would lose (12.00) from holding AdvisorShares Dorsey Wright or give up 1.63% of portfolio value over 90 days.

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

Cambria Value and  vs.  AdvisorShares Dorsey Wright

Cambria Value

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Value and are ranked lower than 2 (%) 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.

AdvisorShares Dorsey

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Dorsey Wright are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, AdvisorShares Dorsey is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cambria Value and AdvisorShares Dorsey

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

The idea behind Cambria Value and and AdvisorShares Dorsey Wright 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.