Correlation Between Vanguard Total and EA Series

Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Vanguard Total and EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard Total Bond and EA Series Trust, you can compare the effects of market volatilities on Vanguard Total 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 Vanguard Total with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and EA Series.

Diversification Opportunities for Vanguard Total and EA Series

-0.22

Correlation Coefficient

Vanguard Total  EA Series

Very good diversification

The 3 months correlation between Vanguard and DRAI is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond 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 Vanguard Total 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 Vanguard Total Bond 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 Vanguard Total i.e., Vanguard Total and EA Series go up and down completely randomly.

Pair Corralation between Vanguard Total and EA Series

Considering the 90-day investment horizon Vanguard Total Bond is expected to generate 0.3 times more return on investment than EA Series. However, Vanguard Total Bond is 3.29 times less risky than EA Series. It trades about 0.07 of its potential returns per unit of risk. EA Series Trust is currently generating about -0.02 per unit of risk. If you would invest  6,930  in Vanguard Total Bond on September 4, 2024 and sell it today you would earn a total of  395.00  from holding Vanguard Total Bond or generate 5.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	41.7%
Values	Daily Returns

Vanguard Total Bond  vs.  EA Series Trust

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

EA Series Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, EA Series is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vanguard Total and EA Series

The main advantage of trading using opposite Vanguard Total and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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.

The idea behind Vanguard Total Bond and EA Series Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.