Correlation Between EA Series and Inspire SmallMid
Can any of the company-specific risk be diversified away by investing in both EA Series and Inspire SmallMid 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 Inspire SmallMid 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 Inspire SmallMid Cap, you can compare the effects of market volatilities on EA Series and Inspire SmallMid 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 Inspire SmallMid. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and Inspire SmallMid.
Diversification Opportunities for EA Series and Inspire SmallMid
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STXD and Inspire is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Inspire SmallMid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire SmallMid Cap 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 Inspire SmallMid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire SmallMid Cap has no effect on the direction of EA Series i.e., EA Series and Inspire SmallMid go up and down completely randomly.
Pair Corralation between EA Series and Inspire SmallMid
Given the investment horizon of 90 days EA Series Trust is expected to generate 0.75 times more return on investment than Inspire SmallMid. However, EA Series Trust is 1.34 times less risky than Inspire SmallMid. It trades about -0.16 of its potential returns per unit of risk. Inspire SmallMid Cap is currently generating about -0.23 per unit of risk. If you would invest 3,363 in EA Series Trust on October 9, 2024 and sell it today you would lose (94.00) from holding EA Series Trust or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EA Series Trust vs. Inspire SmallMid Cap
Performance |
| Timeline |
| EA Series Trust |
| Inspire SmallMid Cap |
EA Series and Inspire SmallMid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and Inspire SmallMid
The main advantage of trading using opposite EA Series and Inspire SmallMid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, Inspire SmallMid 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 Inspire SmallMid will offset losses from the drop in Inspire SmallMid's long position.| EA Series vs. EA Series Trust | EA Series vs. EA Series Trust | EA Series vs. EA Series Trust | EA Series vs. EA Series Trust |
| Inspire SmallMid vs. Inspire Global Hope | Inspire SmallMid vs. Northern Lights | Inspire SmallMid vs. Inspire International ESG | Inspire SmallMid vs. Northern Lights |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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