Correlation Between Cambria Foreign and IShares Core
Can any of the company-specific risk be diversified away by investing in both Cambria Foreign and IShares Core 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 Foreign and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Foreign Shareholder and iShares Core Aggressive, you can compare the effects of market volatilities on Cambria Foreign and IShares Core 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 Foreign with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Foreign and IShares Core.
Diversification Opportunities for Cambria Foreign and IShares Core
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cambria and IShares is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Foreign Shareholder and iShares Core Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggressive and Cambria Foreign 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 Foreign Shareholder are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Aggressive has no effect on the direction of Cambria Foreign i.e., Cambria Foreign and IShares Core go up and down completely randomly.
Pair Corralation between Cambria Foreign and IShares Core
Given the investment horizon of 90 days Cambria Foreign Shareholder is expected to under-perform the IShares Core. In addition to that, Cambria Foreign is 1.57 times more volatile than iShares Core Aggressive. It trades about -0.09 of its total potential returns per unit of risk. iShares Core Aggressive is currently generating about 0.03 per unit of volatility. If you would invest 7,809 in iShares Core Aggressive on August 27, 2024 and sell it today you would earn a total of 27.00 from holding iShares Core Aggressive or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Foreign Shareholder vs. iShares Core Aggressive
Performance |
| Timeline |
| Cambria Foreign Shar |
| iShares Core Aggressive |
Cambria Foreign and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Foreign and IShares Core
The main advantage of trading using opposite Cambria Foreign and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Foreign position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| Cambria Foreign vs. Schwab Fundamental International | Cambria Foreign vs. Schwab Fundamental Emerging | Cambria Foreign vs. Schwab Fundamental Small | Cambria Foreign vs. Schwab Fundamental Large |
| IShares Core vs. iShares Core Growth | IShares Core vs. iShares Core Moderate | IShares Core vs. iShares Core Conservative | IShares Core vs. iShares Core Total |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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