Correlation Between Large Cap and Cambiar Small
Can any of the company-specific risk be diversified away by investing in both Large Cap and Cambiar Small 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 Large Cap and Cambiar Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Growth Profund and Cambiar Small Cap, you can compare the effects of market volatilities on Large Cap and Cambiar Small 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 Large Cap with a short position of Cambiar Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Cambiar Small.
Diversification Opportunities for Large Cap and Cambiar Small
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Large and Cambiar is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Cambiar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Small Cap and Large Cap 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 Large Cap Growth Profund are associated (or correlated) with Cambiar Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Small Cap has no effect on the direction of Large Cap i.e., Large Cap and Cambiar Small go up and down completely randomly.
Pair Corralation between Large Cap and Cambiar Small
Assuming the 90 days horizon Large Cap is expected to generate 1.06 times less return on investment than Cambiar Small. In addition to that, Large Cap is 1.05 times more volatile than Cambiar Small Cap. It trades about 0.1 of its total potential returns per unit of risk. Cambiar Small Cap is currently generating about 0.11 per unit of volatility. If you would invest 1,561 in Cambiar Small Cap on September 1, 2024 and sell it today you would earn a total of 256.00 from holding Cambiar Small Cap or generate 16.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Large Cap Growth Profund vs. Cambiar Small Cap
Performance |
| Timeline |
| Large Cap Growth |
| Cambiar Small Cap |
Large Cap and Cambiar Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Cambiar Small
The main advantage of trading using opposite Large Cap and Cambiar Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Cambiar Small 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 Cambiar Small will offset losses from the drop in Cambiar Small's long position.| Large Cap vs. Short Real Estate | Large Cap vs. Ultrashort Mid Cap Profund | Large Cap vs. Technology Ultrasector Profund | Large Cap vs. Technology Ultrasector Profund |
| Cambiar Small vs. Jpmorgan Dynamic Small | Cambiar Small vs. Cambiar Opportunity Fund | Cambiar Small vs. Virtus Emerging Markets | Cambiar Small vs. Cambiar International Equity |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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