Correlation Between Vanguard Value and Cambria Trinity
Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Vanguard Value and Cambria Trinity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and Cambria Trinity ETF, you can compare the effects of market volatilities on Vanguard Value 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 Vanguard Value with a short position of Cambria Trinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Cambria Trinity.
Diversification Opportunities for Vanguard Value and Cambria Trinity
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Cambria is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index 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 Vanguard 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 Vanguard Value Index 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 Vanguard Value i.e., Vanguard Value and Cambria Trinity go up and down completely randomly.
Pair Corralation between Vanguard Value and Cambria Trinity
Considering the 90-day investment horizon Vanguard Value Index is expected to generate 1.54 times more return on investment than Cambria Trinity. However, Vanguard Value is 1.54 times more volatile than Cambria Trinity ETF. It trades about 0.26 of its potential returns per unit of risk. Cambria Trinity ETF is currently generating about 0.14 per unit of risk. If you would invest 17,342 in Vanguard Value Index on August 30, 2024 and sell it today you would earn a total of 784.00 from holding Vanguard Value Index or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. Cambria Trinity ETF
Performance |
| Timeline |
| Vanguard Value Index |
| Cambria Trinity ETF |
Vanguard Value and Cambria Trinity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Cambria Trinity
The main advantage of trading using opposite Vanguard Value and Cambria Trinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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.| Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| Cambria Trinity vs. Cambria Global Asset | Cambria Trinity vs. Cambria Global Momentum | Cambria Trinity vs. Cambria Emerging Shareholder | Cambria Trinity vs. Cambria Value and |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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