Correlation Between Electronic Arts and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and DFS Furniture 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 DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and DFS Furniture PLC, you can compare the effects of market volatilities on Electronic Arts and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and DFS Furniture.
Diversification Opportunities for Electronic Arts and DFS Furniture
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Electronic and DFS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and DFS Furniture go up and down completely randomly.
Pair Corralation between Electronic Arts and DFS Furniture
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.57 times more return on investment than DFS Furniture. However, Electronic Arts is 1.75 times less risky than DFS Furniture. It trades about 0.05 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.01 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 Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Electronic Arts vs. DFS Furniture PLC
Performance |
| Timeline |
| Electronic Arts |
| DFS Furniture PLC |
Electronic Arts and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and DFS Furniture
The main advantage of trading using opposite Electronic Arts and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Electronic Arts vs. Lendinvest PLC | Electronic Arts vs. Neometals | Electronic Arts vs. Albion Technology General | Electronic Arts vs. Jupiter Fund Management |
| DFS Furniture vs. Ondine Biomedical | DFS Furniture vs. Europa Metals | DFS Furniture vs. Lendinvest PLC | DFS Furniture vs. Neometals |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |