Correlation Between EA Series and WisdomTree Global

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

Diversification Opportunities for EA Series and WisdomTree Global

0.82

Correlation Coefficient

EA Series  WisdomTree Global

Very poor diversification

The 3 months correlation between DRLL and WisdomTree is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and WisdomTree Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Global High 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 WisdomTree Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Global High has no effect on the direction of EA Series i.e., EA Series and WisdomTree Global go up and down completely randomly.

Pair Corralation between EA Series and WisdomTree Global

Given the investment horizon of 90 days EA Series is expected to generate 1.03 times less return on investment than WisdomTree Global. In addition to that, EA Series is 2.26 times more volatile than WisdomTree Global High. It trades about 0.1 of its total potential returns per unit of risk. WisdomTree Global High is currently generating about 0.22 per unit of volatility. If you would invest  5,427  in WisdomTree Global High on April 28, 2025 and sell it today you would earn a total of  443.00  from holding WisdomTree Global High or generate 8.16% 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.  WisdomTree Global High

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 7 (%) 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 August 2025.

WisdomTree Global High

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Global High are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, WisdomTree Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with EA Series and WisdomTree Global

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

The idea behind EA Series Trust and WisdomTree Global High 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..