Correlation Between VanEck Energy and EA Series

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

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

Diversification Opportunities for VanEck Energy and EA Series

0.78

Correlation Coefficient

VanEck Energy  EA Series

Poor diversification

The 3 months correlation between VanEck and DRLL is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Energy Income 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 VanEck Energy 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 VanEck Energy Income 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 VanEck Energy i.e., VanEck Energy and EA Series go up and down completely randomly.

Pair Corralation between VanEck Energy and EA Series

Given the investment horizon of 90 days VanEck Energy Income is expected to generate 1.34 times more return on investment than EA Series. However, VanEck Energy is 1.34 times more volatile than EA Series Trust. It trades about -0.01 of its potential returns per unit of risk. EA Series Trust is currently generating about -0.23 per unit of risk. If you would invest  9,521  in VanEck Energy Income on September 14, 2024 and sell it today you would lose (35.00) from holding VanEck Energy Income or give up 0.37% of portfolio value over 90 days.

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

VanEck Energy Income  vs.  EA Series Trust

VanEck Energy Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Energy Income are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, VanEck Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EA Series Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, EA Series 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 VanEck Energy and EA Series

The main advantage of trading using opposite VanEck Energy and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Energy 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 VanEck Energy Income 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.