Correlation Between Litman Gregory and EA Series
Can any of the company-specific risk be diversified away by investing in both Litman Gregory 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 Litman Gregory and EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litman Gregory Funds and EA Series Trust, you can compare the effects of market volatilities on Litman Gregory 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 Litman Gregory with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and EA Series.
Diversification Opportunities for Litman Gregory and EA Series
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Litman and MDLV is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Funds 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 Litman Gregory 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 Litman Gregory Funds 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 Litman Gregory i.e., Litman Gregory and EA Series go up and down completely randomly.
Pair Corralation between Litman Gregory and EA Series
Given the investment horizon of 90 days Litman Gregory Funds is expected to generate 1.59 times more return on investment than EA Series. However, Litman Gregory is 1.59 times more volatile than EA Series Trust. It trades about 0.26 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.23 per unit of risk. If you would invest 932.00 in Litman Gregory Funds on September 4, 2024 and sell it today you would earn a total of 41.00 from holding Litman Gregory Funds or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litman Gregory Funds vs. EA Series Trust
Performance |
| Timeline |
| Litman Gregory Funds |
| EA Series Trust |
Litman Gregory and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litman Gregory and EA Series
The main advantage of trading using opposite Litman Gregory and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litman Gregory 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.| Litman Gregory vs. FT Vest Equity | Litman Gregory vs. Northern Lights | Litman Gregory vs. Dimensional International High | Litman Gregory vs. JPMorgan Fundamental Data |
| EA Series vs. Global X Funds | EA Series vs. Dell Technologies | EA Series vs. Juniper Networks | EA Series vs. HUMANA INC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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