Correlation Between Electronic Arts and Mitchells Butlers
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Mitchells Butlers 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 Mitchells Butlers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Mitchells Butlers PLC, you can compare the effects of market volatilities on Electronic Arts and Mitchells Butlers 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 Mitchells Butlers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Mitchells Butlers.
Diversification Opportunities for Electronic Arts and Mitchells Butlers
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electronic and Mitchells is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Mitchells Butlers PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitchells Butlers 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 Mitchells Butlers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitchells Butlers PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and Mitchells Butlers go up and down completely randomly.
Pair Corralation between Electronic Arts and Mitchells Butlers
Assuming the 90 days trading horizon Electronic Arts is expected to generate 2.83 times less return on investment than Mitchells Butlers. But when comparing it to its historical volatility, Electronic Arts is 1.57 times less risky than Mitchells Butlers. It trades about 0.1 of its potential returns per unit of risk. Mitchells Butlers PLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 23,100 in Mitchells Butlers PLC on September 13, 2024 and sell it today you would earn a total of 1,150 from holding Mitchells Butlers PLC or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Electronic Arts vs. Mitchells Butlers PLC
Performance |
| Timeline |
| Electronic Arts |
| Mitchells Butlers PLC |
Electronic Arts and Mitchells Butlers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Mitchells Butlers
The main advantage of trading using opposite Electronic Arts and Mitchells Butlers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Mitchells Butlers 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 Mitchells Butlers will offset losses from the drop in Mitchells Butlers' long position.| Electronic Arts vs. Samsung Electronics Co | Electronic Arts vs. Samsung Electronics Co | Electronic Arts vs. Hyundai Motor | Electronic Arts vs. Reliance Industries Ltd |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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