Correlation Between First Trust and Cambria Global
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Cambria Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Cambria Global Momentum, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Cambria Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Cambria Global.
Diversification Opportunities for First Trust and Cambria Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Cambria is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Cambria Global Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Global Momentum and First Trust 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 First Trust Exchange Traded 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 Momentum has no effect on the direction of First Trust i.e., First Trust and Cambria Global go up and down completely randomly.
Pair Corralation between First Trust and Cambria Global
Given the investment horizon of 90 days First Trust is expected to generate 4.09 times less return on investment than Cambria Global. But when comparing it to its historical volatility, First Trust Exchange Traded is 8.77 times less risky than Cambria Global. It trades about 0.53 of its potential returns per unit of risk. Cambria Global Momentum is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,885 in Cambria Global Momentum on September 5, 2024 and sell it today you would earn a total of 131.00 from holding Cambria Global Momentum or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Cambria Global Momentum
Performance |
| Timeline |
| First Trust Exchange |
| Cambria Global Momentum |
First Trust and Cambria Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Cambria Global
The main advantage of trading using opposite First Trust and Cambria Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
| Cambria Global vs. Cambria Global Asset | Cambria Global vs. Cambria Global Value | Cambria Global vs. Cambria Foreign Shareholder | Cambria Global vs. Cambria Value and |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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