Correlation Between Cambiar International and Cambiar Smid

Can any of the company-specific risk be diversified away by investing in both Cambiar International and Cambiar Smid 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 Cambiar International and Cambiar Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cambiar International Equity and Cambiar Smid Fund, you can compare the effects of market volatilities on Cambiar International and Cambiar Smid 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 Cambiar International with a short position of Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar International and Cambiar Smid.

Diversification Opportunities for Cambiar International and Cambiar Smid

-0.38

Correlation Coefficient

Cambiar International  Cambiar Smid

Very good diversification

The 3 months correlation between Cambiar and Cambiar is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar International Equity and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid and Cambiar International 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 Cambiar International Equity are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of Cambiar International i.e., Cambiar International and Cambiar Smid go up and down completely randomly.

Pair Corralation between Cambiar International and Cambiar Smid

Assuming the 90 days horizon Cambiar International Equity is expected to under-perform the Cambiar Smid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Cambiar International Equity is 1.0 times less risky than Cambiar Smid. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Cambiar Smid Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,443  in Cambiar Smid Fund on September 12, 2024 and sell it today you would earn a total of  74.00  from holding Cambiar Smid Fund or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cambiar International Equity  vs.  Cambiar Smid Fund

Cambiar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambiar International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Cambiar International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cambiar Smid

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar Smid Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cambiar Smid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cambiar International and Cambiar Smid

The main advantage of trading using opposite Cambiar International and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambiar International position performs unexpectedly, Cambiar Smid 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 Smid will offset losses from the drop in Cambiar Smid's long position.

The idea behind Cambiar International Equity and Cambiar Smid Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.