Correlation Between Electronic Arts and Associated British
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Associated British 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 Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Associated British Foods, you can compare the effects of market volatilities on Electronic Arts and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Associated British.
Diversification Opportunities for Electronic Arts and Associated British
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and Associated is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Electronic Arts i.e., Electronic Arts and Associated British go up and down completely randomly.
Pair Corralation between Electronic Arts and Associated British
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.68 times more return on investment than Associated British. However, Electronic Arts is 1.47 times less risky than Associated British. It trades about 0.42 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.14 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. Associated British Foods
Performance |
| Timeline |
| Electronic Arts |
| Associated British Foods |
Electronic Arts and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Associated British
The main advantage of trading using opposite Electronic Arts and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British'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 |
| Associated British vs. Vitec Software Group | Associated British vs. Kinnevik Investment AB | Associated British vs. Kaufman Et Broad | Associated British vs. Tatton Asset 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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