Correlation Between Cambria Trinity and Inspire Tactical
Can any of the company-specific risk be diversified away by investing in both Cambria Trinity and Inspire Tactical 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 Inspire Tactical 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 Inspire Tactical Balanced, you can compare the effects of market volatilities on Cambria Trinity and Inspire Tactical 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 Inspire Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambria Trinity and Inspire Tactical.
Diversification Opportunities for Cambria Trinity and Inspire Tactical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cambria and Inspire is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cambria Trinity ETF and Inspire Tactical Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Tactical Balanced 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 Inspire Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Tactical Balanced has no effect on the direction of Cambria Trinity i.e., Cambria Trinity and Inspire Tactical go up and down completely randomly.
Pair Corralation between Cambria Trinity and Inspire Tactical
Given the investment horizon of 90 days Cambria Trinity is expected to generate 1.61 times less return on investment than Inspire Tactical. But when comparing it to its historical volatility, Cambria Trinity ETF is 1.21 times less risky than Inspire Tactical. It trades about 0.06 of its potential returns per unit of risk. Inspire Tactical Balanced is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,464 in Inspire Tactical Balanced on September 14, 2024 and sell it today you would earn a total of 314.00 from holding Inspire Tactical Balanced or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambria Trinity ETF vs. Inspire Tactical Balanced
Performance |
| Timeline |
| Cambria Trinity ETF |
| Inspire Tactical Balanced |
Cambria Trinity and Inspire Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambria Trinity and Inspire Tactical
The main advantage of trading using opposite Cambria Trinity and Inspire Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambria Trinity position performs unexpectedly, Inspire Tactical 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 Inspire Tactical will offset losses from the drop in Inspire Tactical's long position.| Cambria Trinity vs. Cambria Global Asset | Cambria Trinity vs. Cambria Global Momentum | Cambria Trinity vs. Cambria Emerging Shareholder | Cambria Trinity vs. Cambria Value and |
| Inspire Tactical vs. Cambria Trinity ETF | Inspire Tactical vs. Northern Lights | Inspire Tactical vs. Cambria Global Momentum | Inspire Tactical vs. Alpha Architect Value |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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