Correlation Between EA Series and IShares Basic
Can any of the company-specific risk be diversified away by investing in both EA Series and IShares Basic 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 IShares Basic 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 iShares Basic Materials, you can compare the effects of market volatilities on EA Series and IShares Basic 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 IShares Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and IShares Basic.
Diversification Opportunities for EA Series and IShares Basic
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DRLL and IShares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and iShares Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Basic Materials 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 IShares Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Basic Materials has no effect on the direction of EA Series i.e., EA Series and IShares Basic go up and down completely randomly.
Pair Corralation between EA Series and IShares Basic
Given the investment horizon of 90 days EA Series Trust is expected to generate 1.4 times more return on investment than IShares Basic. However, EA Series is 1.4 times more volatile than iShares Basic Materials. It trades about 0.28 of its potential returns per unit of risk. iShares Basic Materials is currently generating about 0.07 per unit of risk. If you would invest 2,847 in EA Series Trust on September 3, 2024 and sell it today you would earn a total of 186.00 from holding EA Series Trust or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EA Series Trust vs. iShares Basic Materials
Performance |
| Timeline |
| EA Series Trust |
| iShares Basic Materials |
EA Series and IShares Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and IShares Basic
The main advantage of trading using opposite EA Series and IShares Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, IShares Basic 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 IShares Basic will offset losses from the drop in IShares Basic's long position.| EA Series vs. iShares Basic Materials | EA Series vs. iShares Utilities ETF | EA Series vs. iShares Financials ETF | EA Series vs. iShares Healthcare ETF |
| IShares Basic vs. Vanguard Industrials Index | IShares Basic vs. Vanguard Communication Services | IShares Basic vs. Vanguard Consumer Discretionary | IShares Basic vs. Vanguard Consumer Staples |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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