Correlation Between Vanguard Large and EA Series

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

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

Diversification Opportunities for Vanguard Large and EA Series

0.57

Correlation Coefficient

Vanguard Large  EA Series

Very weak diversification

The 3 months correlation between Vanguard and MDLV is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Large Cap Index 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 Vanguard Large 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 Vanguard Large Cap Index 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 Vanguard Large i.e., Vanguard Large and EA Series go up and down completely randomly.

Pair Corralation between Vanguard Large and EA Series

Allowing for the 90-day total investment horizon Vanguard Large Cap Index is expected to generate 1.6 times more return on investment than EA Series. However, Vanguard Large is 1.6 times more volatile than EA Series Trust. It trades about 0.14 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.1 per unit of risk. If you would invest  25,791  in Vanguard Large Cap Index on August 30, 2024 and sell it today you would earn a total of  1,770  from holding Vanguard Large Cap Index or generate 6.86% return on investment over 90 days.

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

Vanguard Large Cap Index  vs.  EA Series Trust

Vanguard Large Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Large Cap Index are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Vanguard Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.

EA Series Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 7 (%) 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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Vanguard Large and EA Series

The main advantage of trading using opposite Vanguard Large and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large 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 Vanguard Large Cap Index 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.