Correlation Between Cambria Global and Cambria Trinity

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

Diversification Opportunities for Cambria Global and Cambria Trinity

0.84

Correlation Coefficient

Cambria Global  Cambria Trinity

Very poor diversification

The 3 months correlation between Cambria and Cambria is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Global Asset and Cambria Trinity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Trinity 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 Asset are associated (or correlated) with Cambria Trinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Trinity ETF has no effect on the direction of Cambria Global i.e., Cambria Global and Cambria Trinity go up and down completely randomly.

Pair Corralation between Cambria Global and Cambria Trinity

Considering the 90-day investment horizon Cambria Global Asset is expected to generate 1.16 times more return on investment than Cambria Trinity. However, Cambria Global is 1.16 times more volatile than Cambria Trinity ETF. It trades about 0.06 of its potential returns per unit of risk. Cambria Trinity ETF is currently generating about 0.03 per unit of risk. If you would invest  2,469  in Cambria Global Asset on July 7, 2024 and sell it today you would earn a total of  480.00  from holding Cambria Global Asset or generate 19.44% return on investment over 90 days.

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

Cambria Global Asset  vs.  Cambria Trinity ETF

Cambria Global Asset

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Global Asset are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. 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.

Cambria Trinity ETF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Trinity ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Cambria Trinity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cambria Global and Cambria Trinity

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

The idea behind Cambria Global Asset and Cambria Trinity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.