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Adjusting Risk Within the Economic Cycle

Discover A Better Way To Manage Investor Expectations

In this paper, we propose a framework for managing investment risk and setting performance expectations on the frontend of the investment process. This methodology, which is built around what we call the Cyclical Asset Reallocation Algorithm (CARA), is designed to identify economic changes and pricing trends in financial assets that, when analyzed together, can be used to limit a portfolio’s drawdown to a predetermined percentage.