Correlation Between IShares Semiconductor and EA Series

Can any of the company-specific risk be diversified away by investing in both IShares Semiconductor 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 Semiconductor 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 Semiconductor ETF and EA Series Trust, you can compare the effects of market volatilities on IShares Semiconductor 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 Semiconductor with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Semiconductor and EA Series.

Diversification Opportunities for IShares Semiconductor and EA Series

0.88

Correlation Coefficient

IShares Semiconductor  EA Series

Very poor diversification

The 3 months correlation between IShares and SHOC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Semiconductor ETF 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 Semiconductor 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 Semiconductor ETF 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 Semiconductor i.e., IShares Semiconductor and EA Series go up and down completely randomly.

Pair Corralation between IShares Semiconductor and EA Series

Given the investment horizon of 90 days iShares Semiconductor ETF is expected to under-perform the EA Series. But the etf apears to be less risky and, when comparing its historical volatility, iShares Semiconductor ETF is 2.54 times less risky than EA Series. The etf trades about -0.09 of its potential returns per unit of risk. The EA Series Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,636  in EA Series Trust on December 28, 2024 and sell it today you would lose (652.00) from holding EA Series Trust or give up 14.06% of portfolio value over 90 days.

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

iShares Semiconductor ETF  vs.  EA Series Trust

iShares Semiconductor ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF 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. In spite of rather sound basic indicators, EA Series is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Semiconductor and EA Series

The main advantage of trading using opposite IShares Semiconductor and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Semiconductor 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 Semiconductor ETF 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.