Correlation Between Cambria Emerging and Alpha Architect
Can any of the company-specific risk be diversified away by investing in both Cambria Emerging and Alpha Architect 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 Cambria Emerging and Alpha Architect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Emerging Shareholder and Alpha Architect Quantitative, you can compare the effects of market volatilities on Cambria Emerging and Alpha Architect 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 Cambria Emerging with a short position of Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Emerging and Alpha Architect.
Diversification Opportunities for Cambria Emerging and Alpha Architect
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cambria and Alpha is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Emerging Shareholder and Alpha Architect Quantitative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect Quan and Cambria Emerging 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 Cambria Emerging Shareholder are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect Quan has no effect on the direction of Cambria Emerging i.e., Cambria Emerging and Alpha Architect go up and down completely randomly.
Pair Corralation between Cambria Emerging and Alpha Architect
Given the investment horizon of 90 days Cambria Emerging Shareholder is expected to under-perform the Alpha Architect. In addition to that, Cambria Emerging is 1.09 times more volatile than Alpha Architect Quantitative. It trades about -0.06 of its total potential returns per unit of risk. Alpha Architect Quantitative is currently generating about 0.33 per unit of volatility. If you would invest 4,459 in Alpha Architect Quantitative on September 1, 2024 and sell it today you would earn a total of 300.00 from holding Alpha Architect Quantitative or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Emerging Shareholder vs. Alpha Architect Quantitative
Performance |
| Timeline |
| Cambria Emerging Sha |
| Alpha Architect Quan |
Cambria Emerging and Alpha Architect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Emerging and Alpha Architect
The main advantage of trading using opposite Cambria Emerging and Alpha Architect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Emerging position performs unexpectedly, Alpha Architect 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 Alpha Architect will offset losses from the drop in Alpha Architect's long position.| Cambria Emerging vs. Cambria Foreign Shareholder | Cambria Emerging vs. Cambria Global Value | Cambria Emerging vs. Cambria Global Momentum | Cambria Emerging vs. Cambria Value and |
| Alpha Architect vs. Alpha Architect International | Alpha Architect vs. Alpha Architect Quantitative | Alpha Architect vs. Alpha Architect International | Alpha Architect vs. Alpha Architect Value |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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