Correlation Between EA Series and IShares Select

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

Diversification Opportunities for EA Series and IShares Select

0.59

Correlation Coefficient

EA Series  IShares Select

Very weak diversification

The 3 months correlation between DRLL and IShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and iShares Select Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Select Dividend 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 IShares Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Select Dividend has no effect on the direction of EA Series i.e., EA Series and IShares Select go up and down completely randomly.

Pair Corralation between EA Series and IShares Select

Given the investment horizon of 90 days EA Series Trust is expected to under-perform the IShares Select. In addition to that, EA Series is 2.11 times more volatile than iShares Select Dividend. It trades about -0.06 of its total potential returns per unit of risk. iShares Select Dividend is currently generating about 0.46 per unit of volatility. If you would invest  11,967  in iShares Select Dividend on February 22, 2024 and sell it today you would earn a total of  582.00  from holding iShares Select Dividend or generate 4.86% return on investment over 90 days.

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

EA Series Trust  vs.  iShares Select Dividend

EA Series Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in June 2024.

iShares Select Dividend

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Select Dividend are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, IShares Select may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with EA Series and IShares Select

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

The idea behind EA Series Trust and iShares Select Dividend 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.