Correlation Between Cambria Value and Core Alternative

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

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

Diversification Opportunities for Cambria Value and Core Alternative

-0.63

Correlation Coefficient

Cambria Value  Core Alternative

Excellent diversification

The 3 months correlation between Cambria and Core is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Value and and Core Alternative ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Alternative ETF and Cambria Value 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 Value and are associated (or correlated) with Core Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Alternative ETF has no effect on the direction of Cambria Value i.e., Cambria Value and Core Alternative go up and down completely randomly.

Pair Corralation between Cambria Value and Core Alternative

Given the investment horizon of 90 days Cambria Value and is expected to generate 1.95 times more return on investment than Core Alternative. However, Cambria Value is 1.95 times more volatile than Core Alternative ETF. It trades about 0.08 of its potential returns per unit of risk. Core Alternative ETF is currently generating about -0.17 per unit of risk. If you would invest  2,932  in Cambria Value and on September 18, 2024 and sell it today you would earn a total of  142.00  from holding Cambria Value and or generate 4.84% return on investment over 90 days.

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

Cambria Value and  vs.  Core Alternative ETF

Cambria Value

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Value and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Cambria Value is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Core Alternative ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Alternative ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Core Alternative is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cambria Value and Core Alternative

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

The idea behind Cambria Value and and Core Alternative 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..