Correlation Between VanEck Digital and EA Series

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

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

Diversification Opportunities for VanEck Digital and EA Series

0.91

Correlation Coefficient

VanEck Digital  EA Series

Almost no diversification

The 3 months correlation between VanEck and STRV is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Digital Transformation 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 VanEck Digital 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 VanEck Digital Transformation 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 VanEck Digital i.e., VanEck Digital and EA Series go up and down completely randomly.

Pair Corralation between VanEck Digital and EA Series

Given the investment horizon of 90 days VanEck Digital Transformation is expected to generate 6.55 times more return on investment than EA Series. However, VanEck Digital is 6.55 times more volatile than EA Series Trust. It trades about 0.24 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.21 per unit of risk. If you would invest  977.00  in VanEck Digital Transformation on September 2, 2024 and sell it today you would earn a total of  903.00  from holding VanEck Digital Transformation or generate 92.43% return on investment over 90 days.

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

VanEck Digital Transformation  vs.  EA Series Trust

VanEck Digital Trans

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Digital Transformation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VanEck Digital reported solid returns over the last few months and may actually be approaching a breakup point.

EA Series Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Digital and EA Series

The main advantage of trading using opposite VanEck Digital and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Digital 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 VanEck Digital Transformation 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.