Correlation Between Cambria Global and Keating Active

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

By analyzing existing cross correlation between Cambria Global Momentum and Keating Active ETF, you can compare the effects of market volatilities on Cambria Global and Keating Active 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 Keating Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Global and Keating Active.

Diversification Opportunities for Cambria Global and Keating Active

0.32

Correlation Coefficient

Cambria Global  Keating Active

Weak diversification

The 3 months correlation between Cambria and Keating is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Momentum and Keating Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keating Active ETF 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 Momentum are associated (or correlated) with Keating Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keating Active ETF has no effect on the direction of Cambria Global i.e., Cambria Global and Keating Active go up and down completely randomly.

Pair Corralation between Cambria Global and Keating Active

Given the investment horizon of 90 days Cambria Global Momentum is expected to generate 2.18 times more return on investment than Keating Active. However, Cambria Global is 2.18 times more volatile than Keating Active ETF. It trades about 0.09 of its potential returns per unit of risk. Keating Active ETF is currently generating about -0.05 per unit of risk. If you would invest  2,871  in Cambria Global Momentum on September 14, 2024 and sell it today you would earn a total of  128.00  from holding Cambria Global Momentum or generate 4.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Cambria Global Momentum  vs.  Keating Active ETF

Cambria Global Momentum

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Global Momentum are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cambria Global is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Keating Active ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keating Active ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Keating Active is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cambria Global and Keating Active

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

The idea behind Cambria Global Momentum and Keating Active ETF 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 Anywhere module to track or share privately all of your investments from the convenience of any device.