(CA|RS Signal) Caruso Adaptive Relative Strength Signal

21 Des 2022

CA|RS Signal is a new approach to relative strength analysis that incorporates a security’s volatility and correlation to a benchmark when performing RS analysis. Traditional RS methods compare the performance between two securities to identify which is outperforming on a percentage basis. although this is effective in many situations, some stocks are inherently less volatile and will not outperform a benchmark on a percentage basis. Accounting for a security's volatility and correlation to its benchmark through BETA allows for a more effective method to conduct RS analysis.

In order to build a tool that provides a robust signal, CA|RS Signal is a composite of RS from different time frames. The strongest trends have a security displaying RS across all timeframes measured. CA|RS Signal displays whether RS is identified along with how many internal components are currently identifying RS. This is helpful as a trend may progress from 3 components identifying RS down to only one as it wekas - providing early warning to an investor that RS is present but deteriorating.

CA|RS Signal is also adaptable to any time frame.
CA|RS Signal allows an investor to select which security will act as a benchmark. Traditionally, the S&P 500 is the benchmark for US stocks. International investors can select their local index of choice. Not equity investors can select a commodity, crypto token, or FX basket to get a different RS analysis.