Correlation Between EA Series and Fairlead Tactical

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

Diversification Opportunities for EA Series and Fairlead Tactical

0.56

Correlation Coefficient

EA Series  Fairlead Tactical

Very weak diversification

The 3 months correlation between DRAI and Fairlead is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Fairlead Tactical Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairlead Tactical Sector 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 Fairlead Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairlead Tactical Sector has no effect on the direction of EA Series i.e., EA Series and Fairlead Tactical go up and down completely randomly.

Pair Corralation between EA Series and Fairlead Tactical

Given the investment horizon of 90 days EA Series Trust is expected to under-perform the Fairlead Tactical. In addition to that, EA Series is 1.2 times more volatile than Fairlead Tactical Sector. It trades about -0.09 of its total potential returns per unit of risk. Fairlead Tactical Sector is currently generating about 0.19 per unit of volatility. If you would invest  2,800  in Fairlead Tactical Sector on August 26, 2024 and sell it today you would earn a total of  75.00  from holding Fairlead Tactical Sector or generate 2.68% 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.  Fairlead Tactical Sector

EA Series Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, EA Series is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Fairlead Tactical Sector

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fairlead Tactical Sector are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Fairlead Tactical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with EA Series and Fairlead Tactical

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

The idea behind EA Series Trust and Fairlead Tactical Sector 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.