Correlation Between EA Series and Alpha Architect
Can any of the company-specific risk be diversified away by investing in both EA Series and Alpha Architect 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 EA Series and Alpha Architect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EA Series Trust and Alpha Architect High, you can compare the effects of market volatilities on EA Series and Alpha Architect 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 EA Series with a short position of Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and Alpha Architect.
Diversification Opportunities for EA Series and Alpha Architect
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between DRAI and Alpha is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Alpha Architect High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect High and EA Series 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 EA Series Trust are associated (or correlated) with Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect High has no effect on the direction of EA Series i.e., EA Series and Alpha Architect go up and down completely randomly.
Pair Corralation between EA Series and Alpha Architect
Given the investment horizon of 90 days EA Series Trust is expected to under-perform the Alpha Architect. In addition to that, EA Series is 4.66 times more volatile than Alpha Architect High. It trades about -0.02 of its total potential returns per unit of risk. Alpha Architect High is currently generating about 0.03 per unit of volatility. If you would invest 2,269 in Alpha Architect High on September 12, 2024 and sell it today you would earn a total of 64.00 from holding Alpha Architect High or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.68% |
| Values | Daily Returns |
EA Series Trust vs. Alpha Architect High
Performance |
| Timeline |
| EA Series Trust |
| Alpha Architect High |
EA Series and Alpha Architect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and Alpha Architect
The main advantage of trading using opposite EA Series and Alpha Architect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, Alpha Architect 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 Alpha Architect will offset losses from the drop in Alpha Architect's long position.| EA Series vs. Vanguard Total Stock | EA Series vs. SPDR SP 500 | EA Series vs. iShares Core SP | EA Series vs. Vanguard Total Bond |
| Alpha Architect vs. First Trust Multi Asset | Alpha Architect vs. Collaborative Investment Series | Alpha Architect vs. EA Series Trust | Alpha Architect vs. Aptus Defined Risk |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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