Correlation Between Cambria ETF and FlexShares International
Can any of the company-specific risk be diversified away by investing in both Cambria ETF and FlexShares International 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 ETF and FlexShares International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria ETF Trust and FlexShares International Quality, you can compare the effects of market volatilities on Cambria ETF and FlexShares International 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 ETF with a short position of FlexShares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria ETF and FlexShares International.
Diversification Opportunities for Cambria ETF and FlexShares International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cambria and FlexShares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cambria ETF Trust and FlexShares International Quali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares International and Cambria ETF 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 ETF Trust are associated (or correlated) with FlexShares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares International has no effect on the direction of Cambria ETF i.e., Cambria ETF and FlexShares International go up and down completely randomly.
Pair Corralation between Cambria ETF and FlexShares International
Given the investment horizon of 90 days Cambria ETF Trust is expected to generate 0.61 times more return on investment than FlexShares International. However, Cambria ETF Trust is 1.65 times less risky than FlexShares International. It trades about 0.19 of its potential returns per unit of risk. FlexShares International Quality is currently generating about -0.06 per unit of risk. If you would invest 2,619 in Cambria ETF Trust on September 4, 2024 and sell it today you would earn a total of 61.00 from holding Cambria ETF Trust or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria ETF Trust vs. FlexShares International Quali
Performance |
| Timeline |
| Cambria ETF Trust |
| FlexShares International |
Cambria ETF and FlexShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria ETF and FlexShares International
The main advantage of trading using opposite Cambria ETF and FlexShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria ETF position performs unexpectedly, FlexShares International 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 FlexShares International will offset losses from the drop in FlexShares International's long position.| Cambria ETF vs. FlexShares International Quality | Cambria ETF vs. FlexShares International Quality | Cambria ETF vs. FlexShares Quality Dividend | Cambria ETF vs. First Trust SP |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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