Correlation Between Cambria Trinity and TrueShares Active

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

Diversification Opportunities for Cambria Trinity and TrueShares Active

0.72

Correlation Coefficient

Cambria Trinity  TrueShares Active

Poor diversification

The 3 months correlation between Cambria and TrueShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Trinity ETF and TrueShares Active Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Active Yield 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 TrueShares Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Active Yield has no effect on the direction of Cambria Trinity i.e., Cambria Trinity and TrueShares Active go up and down completely randomly.

Pair Corralation between Cambria Trinity and TrueShares Active

Given the investment horizon of 90 days Cambria Trinity is expected to generate 1.54 times less return on investment than TrueShares Active. But when comparing it to its historical volatility, Cambria Trinity ETF is 1.16 times less risky than TrueShares Active. It trades about 0.04 of its potential returns per unit of risk. TrueShares Active Yield is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,344  in TrueShares Active Yield on September 14, 2024 and sell it today you would earn a total of  119.00  from holding TrueShares Active Yield or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.98%
Values	Daily Returns

Cambria Trinity ETF  vs.  TrueShares Active Yield

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.

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.

Pair Trading with Cambria Trinity and TrueShares Active

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

The idea behind Cambria Trinity ETF and TrueShares Active Yield 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.