Correlation Between Electronic Arts and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Nordic Semiconductor 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 Electronic Arts and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Electronic Arts and Nordic Semiconductor 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 Electronic Arts with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Nordic Semiconductor.
Diversification Opportunities for Electronic Arts and Nordic Semiconductor
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and Nordic is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and Electronic Arts 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 Electronic Arts are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Electronic Arts i.e., Electronic Arts and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Electronic Arts and Nordic Semiconductor
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.47 times more return on investment than Nordic Semiconductor. However, Electronic Arts is 2.11 times less risky than Nordic Semiconductor. It trades about 0.42 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.22 per unit of risk. If you would invest 15,216 in Electronic Arts on September 2, 2024 and sell it today you would earn a total of 1,151 from holding Electronic Arts or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Electronic Arts vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Electronic Arts |
| Nordic Semiconductor ASA |
Electronic Arts and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Nordic Semiconductor
The main advantage of trading using opposite Electronic Arts and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Electronic Arts vs. Uniper SE | Electronic Arts vs. Mulberry Group PLC | Electronic Arts vs. London Security Plc | Electronic Arts vs. Triad Group PLC |
| Nordic Semiconductor vs. Sparebank 1 SR | Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Synchrony Financial | Nordic Semiconductor vs. Coor Service Management |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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