Correlation Between Cambria Tail and Roundhill Investments
Can any of the company-specific risk be diversified away by investing in both Cambria Tail and Roundhill Investments 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 Tail and Roundhill Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambria Tail Risk and Roundhill Investments, you can compare the effects of market volatilities on Cambria Tail and Roundhill Investments 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 Tail with a short position of Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Tail and Roundhill Investments.
Diversification Opportunities for Cambria Tail and Roundhill Investments
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cambria and Roundhill is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Tail Risk and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments and Cambria Tail 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 Tail Risk are associated (or correlated) with Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of Cambria Tail i.e., Cambria Tail and Roundhill Investments go up and down completely randomly.
Pair Corralation between Cambria Tail and Roundhill Investments
Given the investment horizon of 90 days Cambria Tail Risk is expected to under-perform the Roundhill Investments. But the etf apears to be less risky and, when comparing its historical volatility, Cambria Tail Risk is 2.89 times less risky than Roundhill Investments. The etf trades about -0.13 of its potential returns per unit of risk. The Roundhill Investments is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,162 in Roundhill Investments on November 2, 2024 and sell it today you would lose (138.00) from holding Roundhill Investments or give up 6.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 62.14% |
| Values | Daily Returns |
Cambria Tail Risk vs. Roundhill Investments
Performance |
| Timeline |
| Cambria Tail Risk |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Cambria Tail and Roundhill Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Tail and Roundhill Investments
The main advantage of trading using opposite Cambria Tail and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Tail position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' long position.| Cambria Tail vs. Amplify BlackSwan Growth | Cambria Tail vs. AGFiQ Market Neutral | Cambria Tail vs. Quadratic Interest Rate | Cambria Tail vs. AdvisorShares Dorsey Wright |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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