Correlation Between World Energy and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both World Energy and Cambiar Smid 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 World Energy and Cambiar Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Cambiar Smid Fund, you can compare the effects of market volatilities on World Energy and Cambiar Smid 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 World Energy with a short position of Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Cambiar Smid.
Diversification Opportunities for World Energy and Cambiar Smid
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between World and Cambiar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid and World Energy 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 World Energy Fund are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of World Energy i.e., World Energy and Cambiar Smid go up and down completely randomly.
Pair Corralation between World Energy and Cambiar Smid
Assuming the 90 days horizon World Energy Fund is expected to generate 1.47 times more return on investment than Cambiar Smid. However, World Energy is 1.47 times more volatile than Cambiar Smid Fund. It trades about 0.06 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.04 per unit of risk. If you would invest 1,150 in World Energy Fund on September 12, 2024 and sell it today you would earn a total of 319.00 from holding World Energy Fund or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Cambiar Smid Fund
Performance |
| Timeline |
| World Energy |
| Cambiar Smid |
World Energy and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Cambiar Smid
The main advantage of trading using opposite World Energy and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid's long position.| World Energy vs. Aam Select Income | World Energy vs. Arrow Managed Futures | World Energy vs. Rbc Microcap Value | World Energy vs. Volumetric Fund Volumetric |
| Cambiar Smid vs. Virtus Multi Sector Short | Cambiar Smid vs. Angel Oak Ultrashort | Cambiar Smid vs. Cmg Ultra Short | Cambiar Smid vs. Aqr Long Short Equity |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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