Correlation Between EA Series and Dimensional ETF

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

Diversification Opportunities for EA Series and Dimensional ETF

0.63

Correlation Coefficient

EA Series  Dimensional ETF

Poor diversification

The 3 months correlation between MDLV and Dimensional is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of EA Series i.e., EA Series and Dimensional ETF go up and down completely randomly.

Pair Corralation between EA Series and Dimensional ETF

Given the investment horizon of 90 days EA Series Trust is expected to generate 0.53 times more return on investment than Dimensional ETF. However, EA Series Trust is 1.9 times less risky than Dimensional ETF. It trades about 0.29 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.05 per unit of risk. If you would invest  2,454  in EA Series Trust on July 5, 2024 and sell it today you would earn a total of  273.00  from holding EA Series Trust or generate 11.12% return on investment over 90 days.

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

EA Series Trust  vs.  Dimensional ETF Trust

EA Series Trust

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Dimensional ETF Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Dimensional ETF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with EA Series and Dimensional ETF

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

The idea behind EA Series Trust and Dimensional ETF 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.