Correlation Between EA Series and IShares Core

Can any of the company-specific risk be diversified away by investing in both EA Series and IShares Core 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 IShares Core 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 iShares Core SP, you can compare the effects of market volatilities on EA Series and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and IShares Core.

Diversification Opportunities for EA Series and IShares Core

0.47

Correlation Coefficient

EA Series  IShares Core

Very weak diversification

The 3 months correlation between DRLL and IShares is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of EA Series i.e., EA Series and IShares Core go up and down completely randomly.

Pair Corralation between EA Series and IShares Core

Given the investment horizon of 90 days EA Series Trust is expected to under-perform the IShares Core. In addition to that, EA Series is 1.37 times more volatile than iShares Core SP. It trades about -0.08 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.24 per unit of volatility. If you would invest  50,695  in iShares Core SP on February 15, 2024 and sell it today you would earn a total of  1,901  from holding iShares Core SP or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EA Series Trust  vs.  iShares Core SP

EA Series Trust

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in June 2024.

iShares Core SP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with EA Series and IShares Core

The main advantage of trading using opposite EA Series and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.

The idea behind EA Series Trust and iShares Core SP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.