Correlation Between Cambria Global and Adaptive Alpha
Can any of the company-specific risk be diversified away by investing in both Cambria Global and Adaptive Alpha 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 Adaptive Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Global Momentum and Adaptive Alpha Opportunities, you can compare the effects of market volatilities on Cambria Global and Adaptive Alpha 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 Adaptive Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Global and Adaptive Alpha.
Diversification Opportunities for Cambria Global and Adaptive Alpha
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cambria and Adaptive is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Momentum and Adaptive Alpha Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Alpha Oppor 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 Momentum are associated (or correlated) with Adaptive Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Alpha Oppor has no effect on the direction of Cambria Global i.e., Cambria Global and Adaptive Alpha go up and down completely randomly.
Pair Corralation between Cambria Global and Adaptive Alpha
Given the investment horizon of 90 days Cambria Global Momentum is expected to generate 0.45 times more return on investment than Adaptive Alpha. However, Cambria Global Momentum is 2.24 times less risky than Adaptive Alpha. It trades about 0.2 of its potential returns per unit of risk. Adaptive Alpha Opportunities is currently generating about 0.06 per unit of risk. If you would invest 2,883 in Cambria Global Momentum on November 2, 2024 and sell it today you would earn a total of 79.00 from holding Cambria Global Momentum or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Global Momentum vs. Adaptive Alpha Opportunities
Performance |
| Timeline |
| Cambria Global Momentum |
| Adaptive Alpha Oppor |
Cambria Global and Adaptive Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Global and Adaptive Alpha
The main advantage of trading using opposite Cambria Global and Adaptive Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Global position performs unexpectedly, Adaptive Alpha 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 Adaptive Alpha will offset losses from the drop in Adaptive Alpha's long position.| Cambria Global vs. Cambria Global Asset | Cambria Global vs. Cambria Global Value | Cambria Global vs. Cambria Foreign Shareholder | Cambria Global vs. Cambria Value and |
| Adaptive Alpha vs. First Trust Active | Adaptive Alpha vs. Absolute Core Strategy | Adaptive Alpha vs. Pacer Lunt Large | Adaptive Alpha vs. SmartETFs Asia Pacific |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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