Correlation Between TrueShares Active and Cambria Trinity

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

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

Diversification Opportunities for TrueShares Active and Cambria Trinity

0.72

Correlation Coefficient

TrueShares Active  Cambria Trinity

Poor diversification

The 3 months correlation between TrueShares and Cambria is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Active Yield 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 TrueShares Active 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 TrueShares Active Yield 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 TrueShares Active i.e., TrueShares Active and Cambria Trinity go up and down completely randomly.

Pair Corralation between TrueShares Active and Cambria Trinity

Given the investment horizon of 90 days TrueShares Active Yield is expected to under-perform the Cambria Trinity. But the etf apears to be less risky and, when comparing its historical volatility, TrueShares Active Yield is 1.01 times less risky than Cambria Trinity. The etf trades about -0.01 of its potential returns per unit of risk. The Cambria Trinity ETF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,579  in Cambria Trinity ETF on September 14, 2024 and sell it today you would earn a total of  35.00  from holding Cambria Trinity ETF or generate 1.36% return on investment over 90 days.

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

TrueShares Active Yield  vs.  Cambria Trinity ETF

TrueShares Active Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TrueShares Active Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TrueShares Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cambria Trinity ETF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Trinity ETF are ranked lower than 3 (%) 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 TrueShares Active and Cambria Trinity

The main advantage of trading using opposite TrueShares Active and Cambria Trinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueShares Active 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 TrueShares Active Yield 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.