Correlation Between WisdomTree Investments and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments 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 WisdomTree Investments and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and ELECTRONIC ARTS, you can compare the effects of market volatilities on WisdomTree Investments 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 WisdomTree Investments with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and ELECTRONIC ARTS.
Diversification Opportunities for WisdomTree Investments and ELECTRONIC ARTS
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and ELECTRONIC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments i.e., WisdomTree Investments and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between WisdomTree Investments and ELECTRONIC ARTS
Assuming the 90 days horizon WisdomTree Investments is expected to generate 0.63 times more return on investment than ELECTRONIC ARTS. However, WisdomTree Investments is 1.59 times less risky than ELECTRONIC ARTS. It trades about -0.31 of its potential returns per unit of risk. ELECTRONIC ARTS is currently generating about -0.35 per unit of risk. If you would invest 1,126 in WisdomTree Investments on October 30, 2024 and sell it today you would lose (191.00) from holding WisdomTree Investments or give up 16.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Investments vs. ELECTRONIC ARTS
Performance |
| Timeline |
| WisdomTree Investments |
| ELECTRONIC ARTS |
WisdomTree Investments and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and ELECTRONIC ARTS
The main advantage of trading using opposite WisdomTree Investments and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments 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's long position.| WisdomTree Investments vs. INDO RAMA SYNTHETIC | WisdomTree Investments vs. Major Drilling Group | WisdomTree Investments vs. MAGNUM MINING EXP | WisdomTree Investments vs. Silicon Motion Technology |
| ELECTRONIC ARTS vs. BJs Wholesale Club | ELECTRONIC ARTS vs. SCOTT TECHNOLOGY | ELECTRONIC ARTS vs. H2O Retailing | ELECTRONIC ARTS vs. AEON STORES |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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