Correlation Between ONWARD MEDICAL and Electronic Arts

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Can any of the company-specific risk be diversified away by investing in both ONWARD MEDICAL 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 ONWARD MEDICAL and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONWARD MEDICAL BV and Electronic Arts, you can compare the effects of market volatilities on ONWARD MEDICAL 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 ONWARD MEDICAL with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONWARD MEDICAL and Electronic Arts.

Diversification Opportunities for ONWARD MEDICAL and Electronic Arts

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ONWARD and Electronic is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding ONWARD MEDICAL BV and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and ONWARD MEDICAL 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 ONWARD MEDICAL BV 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 ONWARD MEDICAL i.e., ONWARD MEDICAL and Electronic Arts go up and down completely randomly.

Pair Corralation between ONWARD MEDICAL and Electronic Arts

Assuming the 90 days horizon ONWARD MEDICAL BV is expected to generate 1.1 times more return on investment than Electronic Arts. However, ONWARD MEDICAL is 1.1 times more volatile than Electronic Arts. It trades about 0.27 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.24 per unit of risk. If you would invest  504.00  in ONWARD MEDICAL BV on November 1, 2024 and sell it today you would earn a total of  136.00  from holding ONWARD MEDICAL BV or generate 26.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ONWARD MEDICAL BV  vs.  Electronic Arts

 Performance 
       Timeline  
ONWARD MEDICAL BV 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ONWARD MEDICAL BV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONWARD MEDICAL reported solid returns over the last few months and may actually be approaching a breakup point.
Electronic Arts 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Electronic Arts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ONWARD MEDICAL and Electronic Arts Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ONWARD MEDICAL and Electronic Arts

The main advantage of trading using opposite ONWARD MEDICAL and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONWARD MEDICAL 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.
The idea behind ONWARD MEDICAL BV and Electronic Arts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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