Correlation Between EA Series and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both EA Series and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI Kokusai, you can compare the effects of market volatilities on EA Series and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and Xtrackers MSCI.
Diversification Opportunities for EA Series and Xtrackers MSCI
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STXK and Xtrackers is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Xtrackers MSCI Kokusai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Kokusai 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Kokusai has no effect on the direction of EA Series i.e., EA Series and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between EA Series and Xtrackers MSCI
Given the investment horizon of 90 days EA Series Trust is expected to generate 2.1 times more return on investment than Xtrackers MSCI. However, EA Series is 2.1 times more volatile than Xtrackers MSCI Kokusai. It trades about 0.23 of its potential returns per unit of risk. Xtrackers MSCI Kokusai is currently generating about 0.11 per unit of risk. If you would invest 3,142 in EA Series Trust on August 27, 2024 and sell it today you would earn a total of 224.00 from holding EA Series Trust or generate 7.13% 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. Xtrackers MSCI Kokusai
Performance |
| Timeline |
| EA Series Trust |
| Xtrackers MSCI Kokusai |
EA Series and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and Xtrackers MSCI
The main advantage of trading using opposite EA Series and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI'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 |
| Xtrackers MSCI vs. Freedom Day Dividend | Xtrackers MSCI vs. Davis Select International | Xtrackers MSCI vs. iShares MSCI China | Xtrackers MSCI vs. SmartETFs Dividend Builder |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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