Correlation Between Cambria Trinity and IShares ESG

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

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

Diversification Opportunities for Cambria Trinity and IShares ESG

0.88

Correlation Coefficient

Cambria Trinity  IShares ESG

Very poor diversification

The 3 months correlation between Cambria and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Trinity ETF and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware and Cambria Trinity 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 Trinity ETF are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of Cambria Trinity i.e., Cambria Trinity and IShares ESG go up and down completely randomly.

Pair Corralation between Cambria Trinity and IShares ESG

Given the investment horizon of 90 days Cambria Trinity ETF is expected to generate 0.62 times more return on investment than IShares ESG. However, Cambria Trinity ETF is 1.6 times less risky than IShares ESG. It trades about 0.02 of its potential returns per unit of risk. iShares ESG Aware is currently generating about -0.01 per unit of risk. If you would invest  2,542  in Cambria Trinity ETF on December 26, 2024 and sell it today you would earn a total of  16.00  from holding Cambria Trinity ETF or generate 0.63% return on investment over 90 days.

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

Cambria Trinity ETF  vs.  iShares ESG Aware

Cambria Trinity ETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Trinity ETF are ranked lower than 1 (%) 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.

iShares ESG Aware

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares ESG Aware has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares ESG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cambria Trinity and IShares ESG

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

The idea behind Cambria Trinity ETF and iShares ESG Aware 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.