Correlation Between Northern Lights and Cambria Global
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Cambria Global 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 Northern Lights and Cambria Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Cambria Global Asset, you can compare the effects of market volatilities on Northern Lights and Cambria Global 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 Northern Lights with a short position of Cambria Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Cambria Global.
Diversification Opportunities for Northern Lights and Cambria Global
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Cambria is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Cambria Global Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Global Asset and Northern Lights 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 Northern Lights are associated (or correlated) with Cambria Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Global Asset has no effect on the direction of Northern Lights i.e., Northern Lights and Cambria Global go up and down completely randomly.
Pair Corralation between Northern Lights and Cambria Global
Considering the 90-day investment horizon Northern Lights is expected to under-perform the Cambria Global. In addition to that, Northern Lights is 1.67 times more volatile than Cambria Global Asset. It trades about -0.21 of its total potential returns per unit of risk. Cambria Global Asset is currently generating about -0.21 per unit of volatility. If you would invest 2,934 in Cambria Global Asset on October 9, 2024 and sell it today you would lose (63.40) from holding Cambria Global Asset or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Northern Lights vs. Cambria Global Asset
Performance |
| Timeline |
| Northern Lights |
| Cambria Global Asset |
Northern Lights and Cambria Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Cambria Global
The main advantage of trading using opposite Northern Lights and Cambria Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Cambria Global 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 Global will offset losses from the drop in Cambria Global's long position.| Northern Lights vs. Karat Packaging | Northern Lights vs. Tidal ETF Trust | Northern Lights vs. First Trust Enhanced | Northern Lights vs. Western Asset Premier |
| Cambria Global vs. Cambria Global Momentum | Cambria Global vs. Cambria Global Value | Cambria Global vs. Cambria Foreign Shareholder | Cambria Global vs. Cambria Trinity ETF |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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