Correlation Between Cambria Cannabis and First Trust

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

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

Diversification Opportunities for Cambria Cannabis and First Trust

0.46

Correlation Coefficient

Cambria Cannabis  First Trust

Very weak diversification

The 3 months correlation between Cambria and First is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Cannabis ETF and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and Cambria Cannabis 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 Cannabis ETF are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of Cambria Cannabis i.e., Cambria Cannabis and First Trust go up and down completely randomly.

Pair Corralation between Cambria Cannabis and First Trust

Given the investment horizon of 90 days Cambria Cannabis ETF is expected to generate 3.38 times more return on investment than First Trust. However, Cambria Cannabis is 3.38 times more volatile than First Trust Nasdaq. It trades about 0.09 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.22 per unit of risk. If you would invest  497.00  in Cambria Cannabis ETF on August 4, 2025 and sell it today you would earn a total of  83.00  from holding Cambria Cannabis ETF or generate 16.7% return on investment over 90 days.

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

Cambria Cannabis ETF  vs.  First Trust Nasdaq

Cambria Cannabis ETF

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Cannabis ETF are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, Cambria Cannabis exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Trust Nasdaq

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Nasdaq are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, First Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cambria Cannabis and First Trust

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

The idea behind Cambria Cannabis ETF and First Trust Nasdaq 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.