Correlation Between SPDR SP and EA Series

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

Diversification Opportunities for SPDR SP and EA Series

0.69

Correlation Coefficient

SPDR SP  EA Series

Poor diversification

The 3 months correlation between SPDR and DRLL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil 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 SP 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 SP Oil 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 SP i.e., SPDR SP and EA Series go up and down completely randomly.

Pair Corralation between SPDR SP and EA Series

Considering the 90-day investment horizon SPDR SP is expected to generate 2.41 times less return on investment than EA Series. In addition to that, SPDR SP is 1.17 times more volatile than EA Series Trust. It trades about 0.05 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.15 per unit of volatility. If you would invest  2,680  in EA Series Trust on December 26, 2024 and sell it today you would earn a total of  327.00  from holding EA Series Trust or generate 12.2% return on investment over 90 days.

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

SPDR SP Oil  vs.  EA Series Trust

SPDR SP Oil

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Oil are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, SPDR SP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

EA Series Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 11 (%) 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 April 2025.

Pair Trading with SPDR SP and EA Series

The main advantage of trading using opposite SPDR SP and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SP Oil 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..