Correlation Between Dimensional Core and EA Series
Can any of the company-specific risk be diversified away by investing in both Dimensional Core and EA Series 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 Dimensional Core and EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Core Equity and EA Series Trust, you can compare the effects of market volatilities on Dimensional Core and EA Series 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 Dimensional Core with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and EA Series.
Diversification Opportunities for Dimensional Core and EA Series
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and STRV is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust and Dimensional Core 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 Dimensional Core Equity are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Dimensional Core i.e., Dimensional Core and EA Series go up and down completely randomly.
Pair Corralation between Dimensional Core and EA Series
Given the investment horizon of 90 days Dimensional Core Equity is expected to generate 1.1 times more return on investment than EA Series. However, Dimensional Core is 1.1 times more volatile than EA Series Trust. It trades about 0.18 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.17 per unit of risk. If you would invest 3,419 in Dimensional Core Equity on August 28, 2024 and sell it today you would earn a total of 216.00 from holding Dimensional Core Equity or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Core Equity vs. EA Series Trust
Performance |
| Timeline |
| Dimensional Core Equity |
| EA Series Trust |
Dimensional Core and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and EA Series
The main advantage of trading using opposite Dimensional Core and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core position performs unexpectedly, EA Series 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 EA Series will offset losses from the drop in EA Series' long position.| Dimensional Core vs. Dimensional Targeted Value | Dimensional Core vs. Dimensional World ex | Dimensional Core vs. Dimensional Small Cap | Dimensional Core vs. Dimensional Core Equity |
| EA Series vs. Morningstar Unconstrained Allocation | EA Series vs. High Yield Municipal Fund | EA Series vs. Via Renewables | EA Series vs. Knife River |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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