Correlation Between IShares Core and EA Series

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

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

Diversification Opportunities for IShares Core and EA Series

0.27

Correlation Coefficient

IShares Core  EA Series

Modest diversification

The 3 months correlation between IShares and EMPB is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP 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 IShares Core 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 iShares Core SP 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 IShares Core i.e., IShares Core and EA Series go up and down completely randomly.

Pair Corralation between IShares Core and EA Series

Considering the 90-day investment horizon iShares Core SP is expected to under-perform the EA Series. In addition to that, IShares Core is 1.24 times more volatile than EA Series Trust. It trades about -0.07 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.04 per unit of volatility. If you would invest  2,519  in EA Series Trust on December 19, 2024 and sell it today you would earn a total of  41.00  from holding EA Series Trust or generate 1.63% return on investment over 90 days.

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

iShares Core SP  vs.  EA Series Trust

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

EA Series Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, EA Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and EA Series

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

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.