Correlation Between Electronic Arts and African Pioneer
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and African Pioneer 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 African Pioneer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and African Pioneer PLC, you can compare the effects of market volatilities on Electronic Arts and African Pioneer 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 African Pioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and African Pioneer.
Diversification Opportunities for Electronic Arts and African Pioneer
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electronic and African is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and African Pioneer PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Pioneer PLC 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 African Pioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Pioneer PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and African Pioneer go up and down completely randomly.
Pair Corralation between Electronic Arts and African Pioneer
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.3 times more return on investment than African Pioneer. However, Electronic Arts is 3.34 times less risky than African Pioneer. It trades about 0.07 of its potential returns per unit of risk. African Pioneer PLC is currently generating about -0.02 per unit of risk. If you would invest 13,798 in Electronic Arts on September 14, 2024 and sell it today you would earn a total of 2,549 from holding Electronic Arts or generate 18.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Electronic Arts vs. African Pioneer PLC
Performance |
| Timeline |
| Electronic Arts |
| African Pioneer PLC |
Electronic Arts and African Pioneer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and African Pioneer
The main advantage of trading using opposite Electronic Arts and African Pioneer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, African Pioneer 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 African Pioneer will offset losses from the drop in African Pioneer's long position.| Electronic Arts vs. Alior Bank SA | Electronic Arts vs. Ameriprise Financial | Electronic Arts vs. MT Bank Corp | Electronic Arts vs. Cembra Money Bank |
| African Pioneer vs. Cornish Metals | African Pioneer vs. METALL ZUG AG | African Pioneer vs. Hochschild Mining plc | African Pioneer vs. Wheaton Precious Metals |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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