Correlation Between Cambria Value and Quadratic Interest

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

Diversification Opportunities for Cambria Value and Quadratic Interest

-0.81

Correlation Coefficient

Cambria Value  Quadratic Interest

Pay attention - limited upside

The 3 months correlation between Cambria and Quadratic is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Value and and Quadratic Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Interest Rate 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 Quadratic Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Interest Rate has no effect on the direction of Cambria Value i.e., Cambria Value and Quadratic Interest go up and down completely randomly.

Pair Corralation between Cambria Value and Quadratic Interest

Given the investment horizon of 90 days Cambria Value and is expected to under-perform the Quadratic Interest. In addition to that, Cambria Value is 2.14 times more volatile than Quadratic Interest Rate. It trades about -0.29 of its total potential returns per unit of risk. Quadratic Interest Rate is currently generating about -0.34 per unit of volatility. If you would invest  1,797  in Quadratic Interest Rate on September 19, 2024 and sell it today you would lose (55.50) from holding Quadratic Interest Rate or give up 3.09% of portfolio value over 90 days.

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

Cambria Value and  vs.  Quadratic Interest Rate

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.

Quadratic Interest Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadratic Interest Rate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Cambria Value and Quadratic Interest

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

The idea behind Cambria Value and and Quadratic Interest Rate 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.