Correlation Between Cambiar International and Congress Mid

Can any of the company-specific risk be diversified away by investing in both Cambiar International and Congress Mid 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 Congress Mid 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 Congress Mid Cap, you can compare the effects of market volatilities on Cambiar International and Congress Mid 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 Congress Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar International and Congress Mid.

Diversification Opportunities for Cambiar International and Congress Mid

-0.62

Correlation Coefficient

Cambiar International  Congress Mid

Excellent diversification

The 3 months correlation between Cambiar and Congress is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar International Equity and Congress Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Mid Cap 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 Congress Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Mid Cap has no effect on the direction of Cambiar International i.e., Cambiar International and Congress Mid go up and down completely randomly.

Pair Corralation between Cambiar International and Congress Mid

Assuming the 90 days horizon Cambiar International Equity is expected to generate 0.43 times more return on investment than Congress Mid. However, Cambiar International Equity is 2.35 times less risky than Congress Mid. It trades about -0.07 of its potential returns per unit of risk. Congress Mid Cap is currently generating about -0.05 per unit of risk. If you would invest  2,789  in Cambiar International Equity on September 14, 2024 and sell it today you would lose (104.00) from holding Cambiar International Equity or give up 3.73% of portfolio value over 90 days.

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

Cambiar International Equity  vs.  Congress Mid Cap

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.

Congress Mid Cap

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Congress Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Congress Mid 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 Congress Mid

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

The idea behind Cambiar International Equity and Congress Mid Cap 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.