Correlation Between Electronic Arts and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and BW Offshore 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 BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and BW Offshore, you can compare the effects of market volatilities on Electronic Arts and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and BW Offshore.
Diversification Opportunities for Electronic Arts and BW Offshore
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electronic and 0RKH is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Electronic Arts i.e., Electronic Arts and BW Offshore go up and down completely randomly.
Pair Corralation between Electronic Arts and BW Offshore
Assuming the 90 days trading horizon Electronic Arts is expected to generate 2.08 times less return on investment than BW Offshore. But when comparing it to its historical volatility, Electronic Arts is 2.05 times less risky than BW Offshore. It trades about 0.07 of its potential returns per unit of risk. BW Offshore is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,934 in BW Offshore on September 4, 2024 and sell it today you would earn a total of 774.00 from holding BW Offshore or generate 40.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Electronic Arts vs. BW Offshore
Performance |
| Timeline |
| Electronic Arts |
| BW Offshore |
Electronic Arts and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and BW Offshore
The main advantage of trading using opposite Electronic Arts and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Electronic Arts vs. Centaur Media | Electronic Arts vs. Oakley Capital Investments | Electronic Arts vs. Live Nation Entertainment | Electronic Arts vs. New Residential Investment |
| BW Offshore vs. Grand Vision Media | BW Offshore vs. Infrastrutture Wireless Italiane | BW Offshore vs. Prosiebensat 1 Media | BW Offshore vs. MediaZest plc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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