Correlation Between Vanguard Growth and Cambria Foreign

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

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

Diversification Opportunities for Vanguard Growth and Cambria Foreign

0.14

Correlation Coefficient

Vanguard Growth  Cambria Foreign

Average diversification

The 3 months correlation between Vanguard and Cambria is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Cambria Foreign Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Foreign Shar and Vanguard Growth 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 Vanguard Growth Index are associated (or correlated) with Cambria Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Foreign Shar has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Cambria Foreign go up and down completely randomly.

Pair Corralation between Vanguard Growth and Cambria Foreign

Considering the 90-day investment horizon Vanguard Growth Index is expected to under-perform the Cambria Foreign. In addition to that, Vanguard Growth is 1.64 times more volatile than Cambria Foreign Shareholder. It trades about -0.21 of its total potential returns per unit of risk. Cambria Foreign Shareholder is currently generating about 0.11 per unit of volatility. If you would invest  2,538  in Cambria Foreign Shareholder on December 4, 2024 and sell it today you would earn a total of  43.00  from holding Cambria Foreign Shareholder or generate 1.69% return on investment over 90 days.

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

Vanguard Growth Index  vs.  Cambria Foreign Shareholder

Vanguard Growth Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Growth Index has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vanguard Growth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cambria Foreign Shar

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Foreign Shareholder are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Cambria Foreign is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Growth and Cambria Foreign

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

The idea behind Vanguard Growth Index and Cambria Foreign Shareholder 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.