Correlation Between IQ Merger and Cambria Tail
Can any of the company-specific risk be diversified away by investing in both IQ Merger and Cambria Tail 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 IQ Merger and Cambria Tail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ Merger Arbitrage and Cambria Tail Risk, you can compare the effects of market volatilities on IQ Merger and Cambria Tail 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 IQ Merger with a short position of Cambria Tail. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Merger and Cambria Tail.
Diversification Opportunities for IQ Merger and Cambria Tail
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MNA and Cambria is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IQ Merger Arbitrage and Cambria Tail Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Tail Risk and IQ Merger 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 IQ Merger Arbitrage are associated (or correlated) with Cambria Tail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Tail Risk has no effect on the direction of IQ Merger i.e., IQ Merger and Cambria Tail go up and down completely randomly.
Pair Corralation between IQ Merger and Cambria Tail
Considering the 90-day investment horizon IQ Merger Arbitrage is expected to generate 0.37 times more return on investment than Cambria Tail. However, IQ Merger Arbitrage is 2.68 times less risky than Cambria Tail. It trades about 0.09 of its potential returns per unit of risk. Cambria Tail Risk is currently generating about -0.04 per unit of risk. If you would invest 3,079 in IQ Merger Arbitrage on August 24, 2024 and sell it today you would earn a total of 199.00 from holding IQ Merger Arbitrage or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ Merger Arbitrage vs. Cambria Tail Risk
Performance |
| Timeline |
| IQ Merger Arbitrage |
| Cambria Tail Risk |
IQ Merger and Cambria Tail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ Merger and Cambria Tail
The main advantage of trading using opposite IQ Merger and Cambria Tail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Merger position performs unexpectedly, Cambria Tail 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 Cambria Tail will offset losses from the drop in Cambria Tail's long position.| IQ Merger vs. Albany International | IQ Merger vs. Acadia Realty Trust | IQ Merger vs. AptarGroup | IQ Merger vs. Applied Industrial Technologies |
| Cambria Tail vs. Direxion Daily SP | Cambria Tail vs. Direxion Daily Semiconductor | Cambria Tail vs. Direxion Daily Technology | Cambria Tail vs. Direxion Daily SP |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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