Correlation Between Cambiar International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Cambiar International and Dow Jones 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 International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambiar International Equity and Dow Jones Industrial, you can compare the effects of market volatilities on Cambiar International and Dow Jones 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 International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar International and Dow Jones.
Diversification Opportunities for Cambiar International and Dow Jones
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cambiar and Dow is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar International Equity and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Cambiar International 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 International Equity are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Cambiar International i.e., Cambiar International and Dow Jones go up and down completely randomly.
Pair Corralation between Cambiar International and Dow Jones
Assuming the 90 days horizon Cambiar International Equity is expected to generate 0.8 times more return on investment than Dow Jones. However, Cambiar International Equity is 1.24 times less risky than Dow Jones. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 2,576 in Cambiar International Equity on October 22, 2024 and sell it today you would earn a total of 48.00 from holding Cambiar International Equity or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Cambiar International Equity vs. Dow Jones Industrial
Performance |
| Timeline |
Cambiar International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Cambiar International Equity
Pair trading matchups for Cambiar International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Cambiar International and Dow Jones
The main advantage of trading using opposite Cambiar International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambiar International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Cambiar International vs. Congress Mid Cap | Cambiar International vs. Brandes International Small | Cambiar International vs. Johcm International Select | Cambiar International vs. Causeway Emerging Markets |
| Dow Jones vs. Nasdaq Inc | Dow Jones vs. Summit Materials | Dow Jones vs. Vulcan Materials | Dow Jones vs. Celsius Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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