Correlation Between Electronic Arts and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and CleanTech Lithium 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 CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and CleanTech Lithium plc, you can compare the effects of market volatilities on Electronic Arts and CleanTech Lithium 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 CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and CleanTech Lithium.
Diversification Opportunities for Electronic Arts and CleanTech Lithium
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and CleanTech is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Electronic Arts i.e., Electronic Arts and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Electronic Arts and CleanTech Lithium
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.24 times more return on investment than CleanTech Lithium. However, Electronic Arts is 4.18 times less risky than CleanTech Lithium. It trades about 0.05 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.03 per unit of risk. If you would invest 12,311 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 4,040 from holding Electronic Arts or generate 32.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Electronic Arts vs. CleanTech Lithium plc
Performance |
| Timeline |
| Electronic Arts |
| CleanTech Lithium plc |
Electronic Arts and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and CleanTech Lithium
The main advantage of trading using opposite Electronic Arts and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| Electronic Arts vs. Lendinvest PLC | Electronic Arts vs. Neometals | Electronic Arts vs. Albion Technology General | Electronic Arts vs. Jupiter Fund Management |
| CleanTech Lithium vs. Electronic Arts | CleanTech Lithium vs. Federal Realty Investment | CleanTech Lithium vs. LPKF Laser Electronics | CleanTech Lithium vs. Monks Investment Trust |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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