Correlation Between Alpha Architect and Cambria Trinity

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Alpha Architect 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 Alpha Architect and Cambria Trinity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Architect Gdsdn and Cambria Trinity ETF, you can compare the effects of market volatilities on Alpha Architect 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 Alpha Architect with a short position of Cambria Trinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Architect and Cambria Trinity.

Diversification Opportunities for Alpha Architect and Cambria Trinity

AlphaCambriaDiversified AwayAlphaCambriaDiversified Away100%
0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Alpha and Cambria is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Architect Gdsdn 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 Alpha Architect 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 Alpha Architect Gdsdn 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 Alpha Architect i.e., Alpha Architect and Cambria Trinity go up and down completely randomly.

Pair Corralation between Alpha Architect and Cambria Trinity

Given the investment horizon of 90 days Alpha Architect Gdsdn is expected to generate 0.83 times more return on investment than Cambria Trinity. However, Alpha Architect Gdsdn is 1.2 times less risky than Cambria Trinity. It trades about 0.07 of its potential returns per unit of risk. Cambria Trinity ETF is currently generating about 0.03 per unit of risk. If you would invest  2,782  in Alpha Architect Gdsdn on December 4, 2024 and sell it today you would earn a total of  427.00  from holding Alpha Architect Gdsdn or generate 15.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.79%
ValuesDaily Returns

Alpha Architect Gdsdn  vs.  Cambria Trinity ETF

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -3-2-101
JavaScript chart by amCharts 3.21.15GDMA TRTY
       Timeline  
Alpha Architect Gdsdn 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Alpha Architect Gdsdn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Alpha Architect is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar31.431.631.83232.232.432.632.8
Cambria Trinity ETF 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Cambria Trinity ETF has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar2525.225.425.625.82626.226.4

Alpha Architect and Cambria Trinity Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.65-1.23-0.81-0.39-0.02080.340.761.181.62.02 0.51.01.5
JavaScript chart by amCharts 3.21.15GDMA TRTY
       Returns  

Pair Trading with Alpha Architect and Cambria Trinity

The main advantage of trading using opposite Alpha Architect and Cambria Trinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Architect 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 Alpha Architect Gdsdn 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

Other Complementary Tools

Global Correlations
Find global opportunities by holding instruments from different markets
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes