Correlation Between Cambria Global and Arrow ETF
Can any of the company-specific risk be diversified away by investing in both Cambria Global and Arrow ETF 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 Global and Arrow ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Global Asset and Arrow ETF Trust, you can compare the effects of market volatilities on Cambria Global and Arrow ETF 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 Global with a short position of Arrow ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Global and Arrow ETF.
Diversification Opportunities for Cambria Global and Arrow ETF
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cambria and Arrow is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Asset and Arrow ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow ETF Trust and Cambria Global 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 Global Asset are associated (or correlated) with Arrow ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow ETF Trust has no effect on the direction of Cambria Global i.e., Cambria Global and Arrow ETF go up and down completely randomly.
Pair Corralation between Cambria Global and Arrow ETF
Considering the 90-day investment horizon Cambria Global is expected to generate 1.29 times less return on investment than Arrow ETF. But when comparing it to its historical volatility, Cambria Global Asset is 1.05 times less risky than Arrow ETF. It trades about 0.07 of its potential returns per unit of risk. Arrow ETF Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,192 in Arrow ETF Trust on September 1, 2024 and sell it today you would earn a total of 116.00 from holding Arrow ETF Trust or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Global Asset vs. Arrow ETF Trust
Performance |
| Timeline |
| Cambria Global Asset |
| Arrow ETF Trust |
Cambria Global and Arrow ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Global and Arrow ETF
The main advantage of trading using opposite Cambria Global and Arrow ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Global position performs unexpectedly, Arrow ETF 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 Arrow ETF will offset losses from the drop in Arrow ETF's long position.| Cambria Global vs. Cambria Global Momentum | Cambria Global vs. Cambria Global Value | Cambria Global vs. Cambria Foreign Shareholder | Cambria Global vs. Cambria Trinity ETF |
| Arrow ETF vs. iShares Morningstar Multi Asset | Arrow ETF vs. Amplify High Income | Arrow ETF vs. First Trust Multi Asset | Arrow ETF vs. SPDR SSgA Income |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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