Correlation Between EA Series and Freedom Day
Can any of the company-specific risk be diversified away by investing in both EA Series and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on EA Series and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and Freedom Day.
Diversification Opportunities for EA Series and Freedom Day
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DTAN and Freedom is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of EA Series i.e., EA Series and Freedom Day go up and down completely randomly.
Pair Corralation between EA Series and Freedom Day
Given the investment horizon of 90 days EA Series Trust is expected to under-perform the Freedom Day. But the etf apears to be less risky and, when comparing its historical volatility, EA Series Trust is 1.02 times less risky than Freedom Day. The etf trades about -0.12 of its potential returns per unit of risk. The Freedom Day Dividend is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,341 in Freedom Day Dividend on August 31, 2024 and sell it today you would earn a total of 174.00 from holding Freedom Day Dividend or generate 5.21% 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. Freedom Day Dividend
Performance |
| Timeline |
| EA Series Trust |
| Freedom Day Dividend |
EA Series and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and Freedom Day
The main advantage of trading using opposite EA Series and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| EA Series vs. FT Vest Equity | EA Series vs. Zillow Group Class | EA Series vs. Northern Lights | EA Series vs. VanEck Vectors Moodys |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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