Correlation Between Electronic Arts and Uniper SE
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Uniper SE 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 Uniper SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Uniper SE, you can compare the effects of market volatilities on Electronic Arts and Uniper SE 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 Uniper SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Uniper SE.
Diversification Opportunities for Electronic Arts and Uniper SE
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and Uniper is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE 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 Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of Electronic Arts i.e., Electronic Arts and Uniper SE go up and down completely randomly.
Pair Corralation between Electronic Arts and Uniper SE
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.38 times more return on investment than Uniper SE. However, Electronic Arts is 2.66 times less risky than Uniper SE. It trades about 0.46 of its potential returns per unit of risk. Uniper SE is currently generating about -0.07 per unit of risk. If you would invest 15,110 in Electronic Arts on September 1, 2024 and sell it today you would earn a total of 1,257 from holding Electronic Arts or generate 8.32% 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. Uniper SE
Performance |
| Timeline |
| Electronic Arts |
| Uniper SE |
Electronic Arts and Uniper SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Uniper SE
The main advantage of trading using opposite Electronic Arts and Uniper SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Uniper SE 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 Uniper SE will offset losses from the drop in Uniper SE'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 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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