Correlation Between Strategy Shares and Cambria Trinity

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

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

Diversification Opportunities for Strategy Shares and Cambria Trinity

0.71

Correlation Coefficient

Strategy Shares  Cambria Trinity

Poor diversification

The 3 months correlation between Strategy and Cambria is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares NewfoundReSolv 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 Strategy Shares 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 Strategy Shares NewfoundReSolve 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 Strategy Shares i.e., Strategy Shares and Cambria Trinity go up and down completely randomly.

Pair Corralation between Strategy Shares and Cambria Trinity

Given the investment horizon of 90 days Strategy Shares NewfoundReSolve is expected to under-perform the Cambria Trinity. In addition to that, Strategy Shares is 1.99 times more volatile than Cambria Trinity ETF. It trades about -0.06 of its total potential returns per unit of risk. Cambria Trinity ETF is currently generating about 0.05 per unit of volatility. If you would invest  2,528  in Cambria Trinity ETF on December 27, 2024 and sell it today you would earn a total of  30.00  from holding Cambria Trinity ETF or generate 1.19% return on investment over 90 days.

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

Strategy Shares NewfoundReSolv  vs.  Cambria Trinity ETF

Strategy Shares Newf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategy Shares NewfoundReSolve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Cambria Trinity ETF

Risk-Adjusted Performance

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 Strategy Shares and Cambria Trinity

The main advantage of trading using opposite Strategy Shares and Cambria Trinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares 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 Strategy Shares NewfoundReSolve 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.