Correlation Between Dimensional ETF and EA Series

Can any of the company-specific risk be diversified away by investing in both Dimensional ETF 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 Dimensional ETF and EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional ETF Trust and EA Series Trust, you can compare the effects of market volatilities on Dimensional ETF 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 Dimensional ETF with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and EA Series.

Diversification Opportunities for Dimensional ETF and EA Series

0.31

Correlation Coefficient

Dimensional ETF  EA Series

Weak diversification

The 3 months correlation between Dimensional and MDLV is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust 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 Dimensional ETF 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 Dimensional ETF Trust 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 Dimensional ETF i.e., Dimensional ETF and EA Series go up and down completely randomly.

Pair Corralation between Dimensional ETF and EA Series

Given the investment horizon of 90 days Dimensional ETF Trust is expected to under-perform the EA Series. In addition to that, Dimensional ETF is 1.68 times more volatile than EA Series Trust. It trades about -0.01 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.02 per unit of volatility. If you would invest  2,667  in EA Series Trust on September 12, 2024 and sell it today you would earn a total of  18.00  from holding EA Series Trust or generate 0.67% return on investment over 90 days.

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

Dimensional ETF Trust  vs.  EA Series Trust

Dimensional ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

EA Series Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, EA Series 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 Dimensional ETF and EA Series

The main advantage of trading using opposite Dimensional ETF and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF 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 Dimensional ETF Trust 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..