Correlation Between Electronic Arts and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Monks 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 Monks 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 Monks Investment Trust, you can compare the effects of market volatilities on Electronic Arts and Monks 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Monks Investment.
Diversification Opportunities for Electronic Arts and Monks Investment
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronic and Monks is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Electronic Arts i.e., Electronic Arts and Monks Investment go up and down completely randomly.
Pair Corralation between Electronic Arts and Monks Investment
Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.01 times more return on investment than Monks Investment. However, Electronic Arts is 1.01 times more volatile than Monks Investment Trust. It trades about 0.69 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.43 per unit of risk. If you would invest 14,421 in Electronic Arts on August 28, 2024 and sell it today you would earn a total of 2,041 from holding Electronic Arts or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Monks Investment Trust
Performance |
| Timeline |
| Electronic Arts |
| Monks Investment Trust |
Electronic Arts and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Monks Investment
The main advantage of trading using opposite Electronic Arts and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Monks 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 Monks Investment will offset losses from the drop in Monks Investment's long position.| Electronic Arts vs. AMG Advanced Metallurgical | Electronic Arts vs. Hilton Food Group | Electronic Arts vs. Wheaton Precious Metals | Electronic Arts vs. Panther Metals PLC |
| Monks Investment vs. Catalyst Media Group | Monks Investment vs. Oncimmune Holdings plc | Monks Investment vs. Invesco Health Care | Monks Investment vs. Coor Service Management |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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