Correlation Between Cambria Global and Arrow ETF

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

By analyzing existing cross correlation between Cambria Global Asset and Arrow ETF Trust, you can compare the effects of market volatilities on Cambria Global and Arrow ETF 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 Global with a short position of Arrow ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Global and Arrow ETF.

Diversification Opportunities for Cambria Global and Arrow ETF

0.56

Correlation Coefficient

Cambria Global  Arrow ETF

Very weak diversification

The 3 months correlation between Cambria and Arrow is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Asset and Arrow ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow ETF Trust and Cambria Global 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 Global Asset are associated (or correlated) with Arrow ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow ETF Trust has no effect on the direction of Cambria Global i.e., Cambria Global and Arrow ETF go up and down completely randomly.

Pair Corralation between Cambria Global and Arrow ETF

Considering the 90-day investment horizon Cambria Global Asset is expected to generate 1.11 times more return on investment than Arrow ETF. However, Cambria Global is 1.11 times more volatile than Arrow ETF Trust. It trades about -0.12 of its potential returns per unit of risk. Arrow ETF Trust is currently generating about -0.17 per unit of risk. If you would invest  2,965  in Cambria Global Asset on September 24, 2024 and sell it today you would lose (129.00) from holding Cambria Global Asset or give up 4.35% of portfolio value over 90 days.

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

Cambria Global Asset  vs.  Arrow ETF Trust

Cambria Global Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambria Global Asset has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cambria Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Arrow ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Arrow ETF is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cambria Global and Arrow ETF

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

The idea behind Cambria Global Asset and Arrow ETF Trust 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.