Correlation Between Cambria Value and Capitol Series

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

Diversification Opportunities for Cambria Value and Capitol Series

0.9

Correlation Coefficient

Cambria Value  Capitol Series

Almost no diversification

The 3 months correlation between Cambria and Capitol is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Value and and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Cambria Value i.e., Cambria Value and Capitol Series go up and down completely randomly.

Pair Corralation between Cambria Value and Capitol Series

Given the investment horizon of 90 days Cambria Value and is expected to under-perform the Capitol Series. In addition to that, Cambria Value is 2.33 times more volatile than Capitol Series Trust. It trades about -0.12 of its total potential returns per unit of risk. Capitol Series Trust is currently generating about 0.37 per unit of volatility. If you would invest  4,552  in Capitol Series Trust on September 17, 2024 and sell it today you would earn a total of  103.00  from holding Capitol Series Trust or generate 2.26% return on investment over 90 days.

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

Cambria Value and  vs.  Capitol Series Trust

Cambria Value

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Value and are ranked lower than 7 (%) 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.

Capitol Series Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Series Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Capitol Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cambria Value and Capitol Series

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

The idea behind Cambria Value and and Capitol Series Trust 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .