Correlation Between SPDR Global and EA Series

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

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

Diversification Opportunities for SPDR Global and EA Series

0.78

Correlation Coefficient

SPDR Global  EA Series

Poor diversification

The 3 months correlation between SPDR and CCMG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Global Dow 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 SPDR Global 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 SPDR Global Dow 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 SPDR Global i.e., SPDR Global and EA Series go up and down completely randomly.

Pair Corralation between SPDR Global and EA Series

Considering the 90-day investment horizon SPDR Global Dow is expected to generate 0.94 times more return on investment than EA Series. However, SPDR Global Dow is 1.06 times less risky than EA Series. It trades about 0.23 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.05 per unit of risk. If you would invest  13,875  in SPDR Global Dow on December 2, 2024 and sell it today you would earn a total of  395.00  from holding SPDR Global Dow or generate 2.85% return on investment over 90 days.

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

SPDR Global Dow  vs.  EA Series Trust

SPDR Global Dow

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Global Dow are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, SPDR Global is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

EA Series Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days EA Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, EA Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPDR Global and EA Series

The main advantage of trading using opposite SPDR Global and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Global 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 SPDR Global Dow 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.