Correlation Between Cambiar Small and Cambiar Opportunity
Can any of the company-specific risk be diversified away by investing in both Cambiar Small 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 Small 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 Small Cap and Cambiar Opportunity Fund, you can compare the effects of market volatilities on Cambiar Small 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 Small with a short position of Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Small and Cambiar Opportunity.
Diversification Opportunities for Cambiar Small and Cambiar Opportunity
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cambiar and Cambiar is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Small Cap 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 Small 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 Small Cap 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 Small i.e., Cambiar Small and Cambiar Opportunity go up and down completely randomly.
Pair Corralation between Cambiar Small and Cambiar Opportunity
Assuming the 90 days horizon Cambiar Small is expected to generate 1.1 times less return on investment than Cambiar Opportunity. But when comparing it to its historical volatility, Cambiar Small Cap is 1.1 times less risky than Cambiar Opportunity. It trades about 0.05 of its potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,436 in Cambiar Opportunity Fund on August 30, 2024 and sell it today you would earn a total of 647.00 from holding Cambiar Opportunity Fund or generate 26.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambiar Small Cap vs. Cambiar Opportunity Fund
Performance |
| Timeline |
| Cambiar Small Cap |
| Cambiar Opportunity |
Cambiar Small and Cambiar Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambiar Small and Cambiar Opportunity
The main advantage of trading using opposite Cambiar Small and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambiar Small 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 Small vs. Jpmorgan Dynamic Small | Cambiar Small vs. Cambiar Opportunity Fund | Cambiar Small vs. Virtus Emerging Markets | Cambiar Small vs. Cambiar International Equity |
| Cambiar Opportunity vs. Dodge Cox Stock | Cambiar Opportunity vs. American Mutual Fund | Cambiar Opportunity vs. American Funds American | Cambiar Opportunity vs. American Funds American |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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