Correlation Between Commodities Strategy and Cambiar Small
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy 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 Commodities Strategy and Cambiar Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Cambiar Small Cap, you can compare the effects of market volatilities on Commodities Strategy 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 Commodities Strategy with a short position of Cambiar Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Cambiar Small.
Diversification Opportunities for Commodities Strategy and Cambiar Small
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Commodities and Cambiar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund 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 Commodities Strategy 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 Commodities Strategy Fund 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 Commodities Strategy i.e., Commodities Strategy and Cambiar Small go up and down completely randomly.
Pair Corralation between Commodities Strategy and Cambiar Small
Assuming the 90 days horizon Commodities Strategy Fund is expected to under-perform the Cambiar Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Commodities Strategy Fund is 1.69 times less risky than Cambiar Small. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Cambiar Small Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,751 in Cambiar Small Cap on September 4, 2024 and sell it today you would earn a total of 155.00 from holding Cambiar Small Cap or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Cambiar Small Cap
Performance |
| Timeline |
| Commodities Strategy |
| Cambiar Small Cap |
Commodities Strategy and Cambiar Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Cambiar Small
The main advantage of trading using opposite Commodities Strategy and Cambiar Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy 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.| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Energy Fund Investor | Commodities Strategy vs. Real Estate Fund |
| Cambiar Small vs. Cambiar International Equity | Cambiar Small vs. Cambiar Opportunity Fund | Cambiar Small vs. Cambiar Smid Fund | Cambiar Small vs. Cambiar Small Cap |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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