Correlation Between AGFiQ Market and Cambria Tail

Can any of the company-specific risk be diversified away by investing in both AGFiQ Market and Cambria Tail 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 AGFiQ Market and Cambria Tail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGFiQ Market Neutral and Cambria Tail Risk, you can compare the effects of market volatilities on AGFiQ Market and Cambria Tail 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 AGFiQ Market with a short position of Cambria Tail. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGFiQ Market and Cambria Tail.

Diversification Opportunities for AGFiQ Market and Cambria Tail

0.81

Correlation Coefficient

AGFiQ Market  Cambria Tail

Very poor diversification

The 3 months correlation between AGFiQ and Cambria is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AGFiQ Market Neutral and Cambria Tail Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Tail Risk and AGFiQ Market 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 AGFiQ Market Neutral are associated (or correlated) with Cambria Tail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Tail Risk has no effect on the direction of AGFiQ Market i.e., AGFiQ Market and Cambria Tail go up and down completely randomly.

Pair Corralation between AGFiQ Market and Cambria Tail

Given the investment horizon of 90 days AGFiQ Market Neutral is expected to under-perform the Cambria Tail. In addition to that, AGFiQ Market is 2.08 times more volatile than Cambria Tail Risk. It trades about -0.22 of its total potential returns per unit of risk. Cambria Tail Risk is currently generating about 0.04 per unit of volatility. If you would invest  1,189  in Cambria Tail Risk on May 7, 2025 and sell it today you would earn a total of  6.00  from holding Cambria Tail Risk or generate 0.5% return on investment over 90 days.

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

AGFiQ Market Neutral  vs.  Cambria Tail Risk

AGFiQ Market Neutral

Risk-Adjusted Performance

Weakest

Over the last 90 days AGFiQ Market Neutral has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's basic indicators remain quite persistent which may send shares a bit higher in September 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Cambria Tail Risk

Risk-Adjusted Performance

Weakest

Over the last 90 days Cambria Tail Risk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Cambria Tail is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AGFiQ Market and Cambria Tail

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

The idea behind AGFiQ Market Neutral and Cambria Tail Risk 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.