Correlation Between WBI BullBear and Cabana Target
Can any of the company-specific risk be diversified away by investing in both WBI BullBear and Cabana 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 WBI BullBear and Cabana Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WBI BullBear Quality and Cabana Target Drawdown, you can compare the effects of market volatilities on WBI BullBear and Cabana 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 WBI BullBear with a short position of Cabana Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI BullBear and Cabana Target.
Diversification Opportunities for WBI BullBear and Cabana Target
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WBI and Cabana is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding WBI BullBear Quality and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown and WBI BullBear 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 WBI BullBear Quality are associated (or correlated) with Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of WBI BullBear i.e., WBI BullBear and Cabana Target go up and down completely randomly.
Pair Corralation between WBI BullBear and Cabana Target
Given the investment horizon of 90 days WBI BullBear Quality is expected to generate 1.37 times more return on investment than Cabana Target. However, WBI BullBear is 1.37 times more volatile than Cabana Target Drawdown. It trades about 0.11 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.12 per unit of risk. If you would invest 3,337 in WBI BullBear Quality on September 1, 2024 and sell it today you would earn a total of 370.00 from holding WBI BullBear Quality or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
WBI BullBear Quality vs. Cabana Target Drawdown
Performance |
| Timeline |
| WBI BullBear Quality |
| Cabana Target Drawdown |
WBI BullBear and Cabana Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WBI BullBear and Cabana Target
The main advantage of trading using opposite WBI BullBear and Cabana Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WBI BullBear position performs unexpectedly, Cabana 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 Cabana Target will offset losses from the drop in Cabana Target's long position.| WBI BullBear vs. FT Vest Equity | WBI BullBear vs. Northern Lights | WBI BullBear vs. Dimensional International High | WBI BullBear vs. Matthews China Discovery |
| Cabana Target vs. Cambria Global Asset | Cabana Target vs. Cambria Global Value | Cabana Target vs. Cambria Foreign Shareholder | Cabana Target vs. Cambria Value and |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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