Correlation Between Cambiar Small and Tcw Emerging

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

By analyzing existing cross correlation between Cambiar Small Cap and Tcw Emerging Markets, you can compare the effects of market volatilities on Cambiar Small and Tcw Emerging 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 Small with a short position of Tcw Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Small and Tcw Emerging.

Diversification Opportunities for Cambiar Small and Tcw Emerging

-0.74

Correlation Coefficient

Cambiar Small  Tcw Emerging

Pay attention - limited upside

The 3 months correlation between Cambiar and Tcw is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Small Cap and Tcw Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tcw Emerging Markets and Cambiar Small 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 Small Cap are associated (or correlated) with Tcw Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tcw Emerging Markets has no effect on the direction of Cambiar Small i.e., Cambiar Small and Tcw Emerging go up and down completely randomly.

Pair Corralation between Cambiar Small and Tcw Emerging

Assuming the 90 days horizon Cambiar Small Cap is expected to generate 2.32 times more return on investment than Tcw Emerging. However, Cambiar Small is 2.32 times more volatile than Tcw Emerging Markets. It trades about 0.14 of its potential returns per unit of risk. Tcw Emerging Markets is currently generating about -0.06 per unit of risk. If you would invest  1,617  in Cambiar Small Cap on September 12, 2024 and sell it today you would earn a total of  160.00  from holding Cambiar Small Cap or generate 9.89% return on investment over 90 days.

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

Cambiar Small Cap  vs.  Tcw Emerging Markets

Cambiar Small Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cambiar Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tcw Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tcw Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Tcw Emerging 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 Small and Tcw Emerging

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

The idea behind Cambiar Small Cap and Tcw Emerging Markets 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.