Correlation Between EA Series and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both EA Series and Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF Trust, you can compare the effects of market volatilities on EA Series and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and Dimensional ETF.
Diversification Opportunities for EA Series and Dimensional ETF
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STXK and Dimensional is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of EA Series i.e., EA Series and Dimensional ETF go up and down completely randomly.
Pair Corralation between EA Series and Dimensional ETF
Given the investment horizon of 90 days EA Series Trust is expected to generate 1.59 times more return on investment than Dimensional ETF. However, EA Series is 1.59 times more volatile than Dimensional ETF Trust. It trades about 0.09 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.08 per unit of risk. If you would invest 3,109 in EA Series Trust on August 23, 2024 and sell it today you would earn a total of 199.00 from holding EA Series Trust or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EA Series Trust vs. Dimensional ETF Trust
Performance |
| Timeline |
| EA Series Trust |
| Dimensional ETF Trust |
EA Series and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and Dimensional ETF
The main advantage of trading using opposite EA Series and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| EA Series vs. First Trust Mid | EA Series vs. First Trust Large | EA Series vs. First Trust Large | EA Series vs. First Trust Large |
| Dimensional ETF vs. Rbb Fund | Dimensional ETF vs. Ab Tax Aware Short | Dimensional ETF vs. US Treasury 20 | Dimensional ETF vs. EA Series Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |