Correlation Between FUTURE GAMING and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both FUTURE GAMING 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 FUTURE GAMING and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUTURE GAMING GRP and ELECTRONIC ARTS, you can compare the effects of market volatilities on FUTURE GAMING 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 FUTURE GAMING with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUTURE GAMING and ELECTRONIC ARTS.
Diversification Opportunities for FUTURE GAMING and ELECTRONIC ARTS
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FUTURE and ELECTRONIC is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding FUTURE GAMING GRP and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and FUTURE GAMING 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 FUTURE GAMING GRP 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 FUTURE GAMING i.e., FUTURE GAMING and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between FUTURE GAMING and ELECTRONIC ARTS
Assuming the 90 days trading horizon FUTURE GAMING GRP is expected to under-perform the ELECTRONIC ARTS. In addition to that, FUTURE GAMING is 1.82 times more volatile than ELECTRONIC ARTS. It trades about -0.18 of its total potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.53 per unit of volatility. If you would invest 13,440 in ELECTRONIC ARTS on August 24, 2024 and sell it today you would earn a total of 2,324 from holding ELECTRONIC ARTS or generate 17.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
FUTURE GAMING GRP vs. ELECTRONIC ARTS
Performance |
| Timeline |
| FUTURE GAMING GRP |
| ELECTRONIC ARTS |
FUTURE GAMING and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUTURE GAMING and ELECTRONIC ARTS
The main advantage of trading using opposite FUTURE GAMING and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUTURE GAMING 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.| FUTURE GAMING vs. Aegean Airlines SA | FUTURE GAMING vs. Dalata Hotel Group | FUTURE GAMING vs. JAPAN AIRLINES | FUTURE GAMING vs. DALATA HOTEL |
| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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