Correlation Between KIMBALL ELECTRONICS and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and Electronic Arts, you can compare the effects of market volatilities on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Electronic Arts.
Diversification Opportunities for KIMBALL ELECTRONICS and Electronic Arts
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KIMBALL and Electronic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Electronic Arts go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and Electronic Arts
Assuming the 90 days horizon KIMBALL ELECTRONICS is not expected to generate positive returns. Moreover, KIMBALL ELECTRONICS is 1.71 times more volatile than Electronic Arts. It trades away all of its potential returns to assume current level of volatility. Electronic Arts is currently generating about 0.04 per unit of risk. If you would invest 12,622 in Electronic Arts on August 27, 2024 and sell it today you would earn a total of 3,254 from holding Electronic Arts or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.69% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. Electronic Arts
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| Electronic Arts |
KIMBALL ELECTRONICS and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and Electronic Arts
The main advantage of trading using opposite KIMBALL ELECTRONICS and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS 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.| KIMBALL ELECTRONICS vs. Pure Storage | KIMBALL ELECTRONICS vs. Automatic Data Processing | KIMBALL ELECTRONICS vs. PUBLIC STORAGE PRFO | KIMBALL ELECTRONICS vs. Zijin Mining Group |
| Electronic Arts vs. Grand Canyon Education | Electronic Arts vs. Microchip Technology Incorporated | Electronic Arts vs. Check Point Software | Electronic Arts vs. EMBARK EDUCATION LTD |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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