Correlation Between Cambria Foreign and First Trust
Can any of the company-specific risk be diversified away by investing in both Cambria Foreign and First Trust 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 First Trust 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 First Trust Dorsey, you can compare the effects of market volatilities on Cambria Foreign and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Foreign and First Trust.
Diversification Opportunities for Cambria Foreign and First Trust
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cambria and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Foreign Shareholder and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Dorsey has no effect on the direction of Cambria Foreign i.e., Cambria Foreign and First Trust go up and down completely randomly.
Pair Corralation between Cambria Foreign and First Trust
Given the investment horizon of 90 days Cambria Foreign Shareholder is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Cambria Foreign Shareholder is 1.15 times less risky than First Trust. The etf trades about -0.03 of its potential returns per unit of risk. The First Trust Dorsey is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 2,505 in First Trust Dorsey on September 1, 2024 and sell it today you would earn a total of 219.00 from holding First Trust Dorsey or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Foreign Shareholder vs. First Trust Dorsey
Performance |
| Timeline |
| Cambria Foreign Shar |
| First Trust Dorsey |
Cambria Foreign and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Foreign and First Trust
The main advantage of trading using opposite Cambria Foreign and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Foreign position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Cambria Foreign vs. Cambria Shareholder Yield | Cambria Foreign vs. Cambria Emerging Shareholder | Cambria Foreign vs. Cambria Global Value | Cambria Foreign vs. Cambria Global Momentum |
| First Trust vs. Cambria Global Asset | First Trust vs. Cambria Global Value | First Trust vs. Cambria Foreign Shareholder | First Trust 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 Stocks Directory module to find actively traded stocks across global markets.
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