Correlation Between Vanguard and EA Series
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard and EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP Mid Cap and EA Series Trust, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and EA Series.
Diversification Opportunities for Vanguard and EA Series
No risk reduction
The 3 months correlation between Vanguard and STXM is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Mid Cap 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 Vanguard 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 Vanguard SP Mid Cap 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 Vanguard i.e., Vanguard and EA Series go up and down completely randomly.
Pair Corralation between Vanguard and EA Series
Given the investment horizon of 90 days Vanguard is expected to generate 1.05 times less return on investment than EA Series. In addition to that, Vanguard is 1.09 times more volatile than EA Series Trust. It trades about 0.26 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.3 per unit of volatility. If you would invest 2,617 in EA Series Trust on August 30, 2024 and sell it today you would earn a total of 198.00 from holding EA Series Trust or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP Mid Cap vs. EA Series Trust
Performance |
| Timeline |
| Vanguard SP Mid |
| EA Series Trust |
Vanguard and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and EA Series
The main advantage of trading using opposite Vanguard and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Small Cap |
| EA Series vs. Vanguard Mid Cap Index | EA Series vs. Vanguard Extended Market | EA Series vs. iShares Core SP | EA Series vs. iShares Russell Mid Cap |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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