Correlation Between Global X and EA Series

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

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

Diversification Opportunities for Global X and EA Series

0.05

Correlation Coefficient

Global X  EA Series

Significant diversification

The 3 months correlation between Global and TBG is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds 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 Global X 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 Global X Funds 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 Global X i.e., Global X and EA Series go up and down completely randomly.

Pair Corralation between Global X and EA Series

Considering the 90-day investment horizon Global X Funds is expected to under-perform the EA Series. In addition to that, Global X is 1.08 times more volatile than EA Series Trust. It trades about -0.17 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.39 per unit of volatility. If you would invest  3,179  in EA Series Trust on September 4, 2024 and sell it today you would earn a total of  201.00  from holding EA Series Trust or generate 6.32% return on investment over 90 days.

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

Global X Funds  vs.  EA Series Trust

Global X Funds

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

EA Series Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, EA Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and EA Series

The main advantage of trading using opposite Global X and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Funds 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.