Correlation Between Cambria Value and WisdomTree Target
Can any of the company-specific risk be diversified away by investing in both Cambria Value and WisdomTree Target 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 Value and WisdomTree Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Value and and WisdomTree Target Range, you can compare the effects of market volatilities on Cambria Value and WisdomTree Target 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 Value with a short position of WisdomTree Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Value and WisdomTree Target.
Diversification Opportunities for Cambria Value and WisdomTree Target
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cambria and WisdomTree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Value and and WisdomTree Target Range in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Target Range and Cambria Value 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 Value and are associated (or correlated) with WisdomTree Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Target Range has no effect on the direction of Cambria Value i.e., Cambria Value and WisdomTree Target go up and down completely randomly.
Pair Corralation between Cambria Value and WisdomTree Target
Given the investment horizon of 90 days Cambria Value is expected to generate 1.06 times less return on investment than WisdomTree Target. In addition to that, Cambria Value is 1.45 times more volatile than WisdomTree Target Range. It trades about 0.06 of its total potential returns per unit of risk. WisdomTree Target Range is currently generating about 0.1 per unit of volatility. If you would invest 2,061 in WisdomTree Target Range on September 12, 2024 and sell it today you would earn a total of 451.00 from holding WisdomTree Target Range or generate 21.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Value and vs. WisdomTree Target Range
Performance |
| Timeline |
| Cambria Value |
| WisdomTree Target Range |
Cambria Value and WisdomTree Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Value and WisdomTree Target
The main advantage of trading using opposite Cambria Value and WisdomTree Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Value position performs unexpectedly, WisdomTree Target 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 Target will offset losses from the drop in WisdomTree Target's long position.| Cambria Value vs. Cambria Global Momentum | Cambria Value vs. Cambria Emerging Shareholder | Cambria Value vs. Cambria Shareholder Yield | Cambria Value vs. Cambria Foreign Shareholder |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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