Correlation Between Electronic Arts and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Eastman Chemical 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 Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Eastman Chemical Co, you can compare the effects of market volatilities on Electronic Arts and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Eastman Chemical.
Diversification Opportunities for Electronic Arts and Eastman Chemical
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and Eastman is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Electronic Arts i.e., Electronic Arts and Eastman Chemical go up and down completely randomly.
Pair Corralation between Electronic Arts and Eastman Chemical
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.67 times more return on investment than Eastman Chemical. However, Electronic Arts is 1.5 times less risky than Eastman Chemical. It trades about 0.18 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.11 per unit of risk. If you would invest 15,895 in Electronic Arts on September 12, 2024 and sell it today you would earn a total of 524.00 from holding Electronic Arts or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Eastman Chemical Co
Performance |
| Timeline |
| Electronic Arts |
| Eastman Chemical |
Electronic Arts and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Eastman Chemical
The main advantage of trading using opposite Electronic Arts and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Electronic Arts vs. Hong Kong Land | Electronic Arts vs. Neometals | Electronic Arts vs. Coor Service Management | Electronic Arts vs. Fidelity Sustainable USD |
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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 Stocks Directory module to find actively traded stocks across global markets.
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