Correlation Between EA Series and Vanguard Value

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

Diversification Opportunities for EA Series and Vanguard Value

0.89

Correlation Coefficient

EA Series  Vanguard Value

Very poor diversification

The 3 months correlation between MDLV and Vanguard is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index 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 Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of EA Series i.e., EA Series and Vanguard Value go up and down completely randomly.

Pair Corralation between EA Series and Vanguard Value

Given the investment horizon of 90 days EA Series Trust is expected to generate 0.91 times more return on investment than Vanguard Value. However, EA Series Trust is 1.1 times less risky than Vanguard Value. It trades about 0.07 of its potential returns per unit of risk. Vanguard Value Index is currently generating about -0.02 per unit of risk. If you would invest  2,689  in EA Series Trust on December 4, 2024 and sell it today you would earn a total of  73.00  from holding EA Series Trust or generate 2.71% return on investment over 90 days.

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

EA Series Trust  vs.  Vanguard Value Index

EA Series Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, EA Series is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vanguard Value Index

Risk-Adjusted Performance

Very Weak

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

Pair Trading with EA Series and Vanguard Value

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

The idea behind EA Series Trust and Vanguard Value Index 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.