Correlation Between Electronic Arts and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and XLMedia 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 XLMedia 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 XLMedia PLC, you can compare the effects of market volatilities on Electronic Arts and XLMedia 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and XLMedia PLC.
Diversification Opportunities for Electronic Arts and XLMedia PLC
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronic and XLMedia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and XLMedia PLC go up and down completely randomly.
Pair Corralation between Electronic Arts and XLMedia PLC
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.21 times more return on investment than XLMedia PLC. However, Electronic Arts is 4.68 times less risky than XLMedia PLC. It trades about 0.04 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.0 per unit of risk. If you would invest 12,340 in Electronic Arts on September 26, 2024 and sell it today you would earn a total of 2,584 from holding Electronic Arts or generate 20.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Electronic Arts vs. XLMedia PLC
Performance |
| Timeline |
| Electronic Arts |
| XLMedia PLC |
Electronic Arts and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and XLMedia PLC
The main advantage of trading using opposite Electronic Arts and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Electronic Arts vs. Gamma Communications PLC | Electronic Arts vs. Sabre Insurance Group | Electronic Arts vs. Bank of Ireland | Electronic Arts vs. Lloyds Banking Group |
| XLMedia PLC vs. Electronic Arts | XLMedia PLC vs. GoldMining | XLMedia PLC vs. Arrow Electronics | XLMedia PLC vs. Empire Metals Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| CEOs Directory Screen CEOs from public companies around the world |