Correlation Between Cambria Global and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both Cambria Global and WisdomTree International 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 WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Global Value and WisdomTree International SmallCap, you can compare the effects of market volatilities on Cambria Global and WisdomTree International 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 WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Global and WisdomTree International.
Diversification Opportunities for Cambria Global and WisdomTree International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cambria and WisdomTree is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Value and WisdomTree International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International 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 Value are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Cambria Global i.e., Cambria Global and WisdomTree International go up and down completely randomly.
Pair Corralation between Cambria Global and WisdomTree International
Given the investment horizon of 90 days Cambria Global Value is expected to under-perform the WisdomTree International. In addition to that, Cambria Global is 1.27 times more volatile than WisdomTree International SmallCap. It trades about -0.18 of its total potential returns per unit of risk. WisdomTree International SmallCap is currently generating about -0.07 per unit of volatility. If you would invest 6,507 in WisdomTree International SmallCap on August 28, 2024 and sell it today you would lose (81.00) from holding WisdomTree International SmallCap or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Global Value vs. WisdomTree International Small
Performance |
| Timeline |
| Cambria Global Value |
| WisdomTree International |
Cambria Global and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Global and WisdomTree International
The main advantage of trading using opposite Cambria Global and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Global position performs unexpectedly, WisdomTree International 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 WisdomTree International will offset losses from the drop in WisdomTree International's long position.| Cambria Global vs. Schwab Fundamental International | Cambria Global vs. Schwab Fundamental Emerging | Cambria Global vs. Schwab Fundamental Small | Cambria Global vs. Schwab Fundamental Large |
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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