Correlation Between First Trust and Cambria Micro
Can any of the company-specific risk be diversified away by investing in both First Trust and Cambria Micro 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 Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SMID and Cambria Micro And, you can compare the effects of market volatilities on First Trust and Cambria Micro 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 Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Cambria Micro.
Diversification Opportunities for First Trust and Cambria Micro
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Cambria is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SMID and Cambria Micro And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Micro And 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 SMID are associated (or correlated) with Cambria Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Micro And has no effect on the direction of First Trust i.e., First Trust and Cambria Micro go up and down completely randomly.
Pair Corralation between First Trust and Cambria Micro
Given the investment horizon of 90 days First Trust is expected to generate 1.09 times less return on investment than Cambria Micro. But when comparing it to its historical volatility, First Trust SMID is 1.29 times less risky than Cambria Micro. It trades about 0.31 of its potential returns per unit of risk. Cambria Micro And is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,617 in Cambria Micro And on August 28, 2024 and sell it today you would earn a total of 243.00 from holding Cambria Micro And or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SMID vs. Cambria Micro And
Performance |
| Timeline |
| First Trust SMID |
| Cambria Micro And |
First Trust and Cambria Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Cambria Micro
The main advantage of trading using opposite First Trust and Cambria Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Cambria Micro 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 Micro will offset losses from the drop in Cambria Micro's long position.| First Trust vs. Vanguard Mid Cap Index | First Trust vs. iShares Core SP | First Trust vs. SPDR SP MIDCAP | First Trust vs. First Trust Dorsey |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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