Correlation Between Electronic Arts and Lowland Investment
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Lowland Investment 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 Lowland Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Lowland Investment Co, you can compare the effects of market volatilities on Electronic Arts and Lowland Investment 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 Lowland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Lowland Investment.
Diversification Opportunities for Electronic Arts and Lowland Investment
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and Lowland is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Lowland Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowland Investment 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 Lowland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowland Investment has no effect on the direction of Electronic Arts i.e., Electronic Arts and Lowland Investment go up and down completely randomly.
Pair Corralation between Electronic Arts and Lowland Investment
Assuming the 90 days trading horizon Electronic Arts is expected to generate 2.57 times more return on investment than Lowland Investment. However, Electronic Arts is 2.57 times more volatile than Lowland Investment Co. It trades about 0.26 of its potential returns per unit of risk. Lowland Investment Co is currently generating about 0.2 per unit of risk. If you would invest 11,796 in Electronic Arts on November 28, 2024 and sell it today you would earn a total of 1,402 from holding Electronic Arts or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Lowland Investment Co
Performance |
| Timeline |
| Electronic Arts |
| Lowland Investment |
Electronic Arts and Lowland Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Lowland Investment
The main advantage of trading using opposite Electronic Arts and Lowland Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Lowland Investment 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 Lowland Investment will offset losses from the drop in Lowland Investment's long position.| Electronic Arts vs. Evolution Gaming Group | Electronic Arts vs. China Pacific Insurance | Electronic Arts vs. UNIQA Insurance Group | Electronic Arts vs. Ecclesiastical Insurance Office |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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