Correlation Between EA Series and Discipline Fund

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

Diversification Opportunities for EA Series and Discipline Fund

0.52

Correlation Coefficient

EA Series  Discipline Fund

Very weak diversification

The 3 months correlation between DRAI and Discipline is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Discipline Fund ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discipline Fund ETF 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 Discipline Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discipline Fund ETF has no effect on the direction of EA Series i.e., EA Series and Discipline Fund go up and down completely randomly.

Pair Corralation between EA Series and Discipline Fund

Given the investment horizon of 90 days EA Series Trust is expected to generate 3.95 times more return on investment than Discipline Fund. However, EA Series is 3.95 times more volatile than Discipline Fund ETF. It trades about -0.03 of its potential returns per unit of risk. Discipline Fund ETF is currently generating about -0.22 per unit of risk. If you would invest  2,401  in EA Series Trust on September 28, 2024 and sell it today you would lose (27.00) from holding EA Series Trust or give up 1.12% of portfolio value over 90 days.

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

EA Series Trust  vs.  Discipline Fund ETF

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Discipline Fund ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Discipline Fund ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Discipline Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EA Series and Discipline Fund

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

The idea behind EA Series Trust and Discipline Fund ETF 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.