Correlation Between BW Offshore and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Electronic Arts 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 BW Offshore and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Electronic Arts, you can compare the effects of market volatilities on BW Offshore and Electronic Arts 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 BW Offshore with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Electronic Arts.
Diversification Opportunities for BW Offshore and Electronic Arts
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0RKH and Electronic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and BW Offshore 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 BW Offshore are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of BW Offshore i.e., BW Offshore and Electronic Arts go up and down completely randomly.
Pair Corralation between BW Offshore and Electronic Arts
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Electronic Arts. In addition to that, BW Offshore is 3.63 times more volatile than Electronic Arts. It trades about -0.09 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.42 per unit of volatility. If you would invest 15,216 in Electronic Arts on September 2, 2024 and sell it today you would earn a total of 1,151 from holding Electronic Arts or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
BW Offshore vs. Electronic Arts
Performance |
| Timeline |
| BW Offshore |
| Electronic Arts |
BW Offshore and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Electronic Arts
The main advantage of trading using opposite BW Offshore and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| BW Offshore vs. Uniper SE | BW Offshore vs. Mulberry Group PLC | BW Offshore vs. London Security Plc | BW Offshore vs. Triad Group PLC |
| Electronic Arts vs. Uniper SE | Electronic Arts vs. Mulberry Group PLC | Electronic Arts vs. London Security Plc | Electronic Arts vs. Triad Group PLC |
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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