Correlation Between Electronic Arts and Eneraqua Technologies
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Eneraqua Technologies 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 Eneraqua Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Eneraqua Technologies PLC, you can compare the effects of market volatilities on Electronic Arts and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Eneraqua Technologies.
Diversification Opportunities for Electronic Arts and Eneraqua Technologies
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronic and Eneraqua is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and Eneraqua Technologies go up and down completely randomly.
Pair Corralation between Electronic Arts and Eneraqua Technologies
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the Eneraqua Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.59 times less risky than Eneraqua Technologies. The stock trades about -0.64 of its potential returns per unit of risk. The Eneraqua Technologies PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,950 in Eneraqua Technologies PLC on October 12, 2024 and sell it today you would earn a total of 150.00 from holding Eneraqua Technologies PLC or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Electronic Arts vs. Eneraqua Technologies PLC
Performance |
| Timeline |
| Electronic Arts |
| Eneraqua Technologies PLC |
Electronic Arts and Eneraqua Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Eneraqua Technologies
The main advantage of trading using opposite Electronic Arts and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.| Electronic Arts vs. First Class Metals | Electronic Arts vs. Liontrust Asset Management | Electronic Arts vs. Air Products Chemicals | Electronic Arts vs. Jacquet Metal Service |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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