Correlation Between Playmates Toys and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both Playmates Toys 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 Playmates Toys and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playmates Toys Limited and ELECTRONIC ARTS, you can compare the effects of market volatilities on Playmates Toys 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 Playmates Toys with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and ELECTRONIC ARTS.
Diversification Opportunities for Playmates Toys and ELECTRONIC ARTS
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playmates and ELECTRONIC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and Playmates Toys 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 Playmates Toys Limited 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 Playmates Toys i.e., Playmates Toys and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between Playmates Toys and ELECTRONIC ARTS
Assuming the 90 days horizon Playmates Toys Limited is expected to generate 5.53 times more return on investment than ELECTRONIC ARTS. However, Playmates Toys is 5.53 times more volatile than ELECTRONIC ARTS. It trades about 0.05 of its potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.06 per unit of risk. If you would invest 5.08 in Playmates Toys Limited on October 13, 2024 and sell it today you would earn a total of 1.32 from holding Playmates Toys Limited or generate 25.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playmates Toys Limited vs. ELECTRONIC ARTS
Performance |
| Timeline |
| Playmates Toys |
| ELECTRONIC ARTS |
Playmates Toys and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playmates Toys and ELECTRONIC ARTS
The main advantage of trading using opposite Playmates Toys and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys 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.| Playmates Toys vs. Jacquet Metal Service | Playmates Toys vs. Western Copper and | Playmates Toys vs. Diamyd Medical AB | Playmates Toys vs. Perseus Mining Limited |
| ELECTRONIC ARTS vs. Playmates Toys Limited | ELECTRONIC ARTS vs. Playa Hotels Resorts | ELECTRONIC ARTS vs. PLAYMATES TOYS | ELECTRONIC ARTS vs. American Homes 4 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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