Correlation Between EA Series and Global X

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

Diversification Opportunities for EA Series and Global X

0.79

Correlation Coefficient

EA Series  Global X

Poor diversification

The 3 months correlation between DRLL and Global is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of EA Series i.e., EA Series and Global X go up and down completely randomly.

Pair Corralation between EA Series and Global X

Given the investment horizon of 90 days EA Series Trust is expected to under-perform the Global X. In addition to that, EA Series is 6.58 times more volatile than Global X Funds. It trades about -0.15 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.15 per unit of volatility. If you would invest  2,581  in Global X Funds on September 12, 2024 and sell it today you would earn a total of  13.00  from holding Global X Funds or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

EA Series Trust  vs.  Global X Funds

EA Series Trust

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Funds

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Global X is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EA Series and Global X

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

The idea behind EA Series Trust and Global X Funds 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.