Correlation Between Cambiar Smid and Cambiar Opportunity
Can any of the company-specific risk be diversified away by investing in both Cambiar Smid and Cambiar Opportunity 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 Cambiar Smid and Cambiar Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambiar Smid Fund and Cambiar Opportunity Fund, you can compare the effects of market volatilities on Cambiar Smid and Cambiar Opportunity 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 Cambiar Smid with a short position of Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Smid and Cambiar Opportunity.
Diversification Opportunities for Cambiar Smid and Cambiar Opportunity
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cambiar and Cambiar is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Smid Fund and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity and Cambiar Smid 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 Cambiar Smid Fund are associated (or correlated) with Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of Cambiar Smid i.e., Cambiar Smid and Cambiar Opportunity go up and down completely randomly.
Pair Corralation between Cambiar Smid and Cambiar Opportunity
Assuming the 90 days horizon Cambiar Smid is expected to generate 1.14 times less return on investment than Cambiar Opportunity. In addition to that, Cambiar Smid is 1.34 times more volatile than Cambiar Opportunity Fund. It trades about 0.19 of its total potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.29 per unit of volatility. If you would invest 2,970 in Cambiar Opportunity Fund on September 3, 2024 and sell it today you would earn a total of 130.00 from holding Cambiar Opportunity Fund or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambiar Smid Fund vs. Cambiar Opportunity Fund
Performance |
| Timeline |
| Cambiar Smid |
| Cambiar Opportunity |
Cambiar Smid and Cambiar Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambiar Smid and Cambiar Opportunity
The main advantage of trading using opposite Cambiar Smid and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambiar Smid position performs unexpectedly, Cambiar Opportunity 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 Opportunity will offset losses from the drop in Cambiar Opportunity's long position.| Cambiar Smid vs. World Energy Fund | Cambiar Smid vs. Tortoise Energy Independence | Cambiar Smid vs. Gamco Natural Resources | Cambiar Smid vs. Energy Basic Materials |
| Cambiar Opportunity vs. Columbia Real Estate | Cambiar Opportunity vs. Dunham Real Estate | Cambiar Opportunity vs. Commonwealth Real Estate | Cambiar Opportunity vs. Virtus Real Estate |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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