Correlation Between Electronic Arts and Ferrexpo PLC
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Ferrexpo PLC 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 Ferrexpo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Ferrexpo PLC, you can compare the effects of market volatilities on Electronic Arts and Ferrexpo PLC 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 Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Ferrexpo PLC.
Diversification Opportunities for Electronic Arts and Ferrexpo PLC
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and Ferrexpo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo 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 Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and Ferrexpo PLC go up and down completely randomly.
Pair Corralation between Electronic Arts and Ferrexpo PLC
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the Ferrexpo PLC. In addition to that, Electronic Arts is 1.15 times more volatile than Ferrexpo PLC. It trades about -0.17 of its total potential returns per unit of risk. Ferrexpo PLC is currently generating about 0.06 per unit of volatility. If you would invest 10,760 in Ferrexpo PLC on November 6, 2024 and sell it today you would earn a total of 320.00 from holding Ferrexpo PLC or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Ferrexpo PLC
Performance |
| Timeline |
| Electronic Arts |
| Ferrexpo PLC |
Electronic Arts and Ferrexpo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Ferrexpo PLC
The main advantage of trading using opposite Electronic Arts and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Ferrexpo PLC 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 Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.| Electronic Arts vs. New Residential Investment | Electronic Arts vs. CAP LEASE AVIATION | Electronic Arts vs. Livermore Investments Group | Electronic Arts vs. Alaska Air Group |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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