Correlation Between Cambria Micro and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Cambria Micro and Dow Jones 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 Micro and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Micro And and Dow Jones Industrial, you can compare the effects of market volatilities on Cambria Micro and Dow Jones 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 Micro with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Micro and Dow Jones.
Diversification Opportunities for Cambria Micro and Dow Jones
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cambria and Dow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Micro And and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Cambria Micro 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 Micro And are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Cambria Micro i.e., Cambria Micro and Dow Jones go up and down completely randomly.
Pair Corralation between Cambria Micro and Dow Jones
Given the investment horizon of 90 days Cambria Micro is expected to generate 2.63 times less return on investment than Dow Jones. In addition to that, Cambria Micro is 1.19 times more volatile than Dow Jones Industrial. It trades about 0.05 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,329,703 in Dow Jones Industrial on October 26, 2024 and sell it today you would earn a total of 112,722 from holding Dow Jones Industrial or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Cambria Micro And vs. Dow Jones Industrial
Performance |
| Timeline |
Cambria Micro and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Cambria Micro And
Pair trading matchups for Cambria Micro
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Cambria Micro and Dow Jones
The main advantage of trading using opposite Cambria Micro and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Micro position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Cambria Micro vs. Research Affiliates Deletions | Cambria Micro vs. First Trust Dow | Cambria Micro vs. iShares Micro Cap ETF | Cambria Micro vs. Vanguard Mega Cap |
| Dow Jones vs. Asure Software | Dow Jones vs. Amkor Technology | Dow Jones vs. Radcom | Dow Jones vs. Senmiao Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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