Correlation Between Pure Storage and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Pure Storage 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 Pure Storage and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and Electronic Arts, you can compare the effects of market volatilities on Pure Storage 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 Pure Storage with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Electronic Arts.
Diversification Opportunities for Pure Storage and Electronic Arts
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pure and Electronic is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Pure Storage 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 Pure Storage 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 Pure Storage i.e., Pure Storage and Electronic Arts go up and down completely randomly.
Pair Corralation between Pure Storage and Electronic Arts
Assuming the 90 days horizon Pure Storage is expected to generate 2.31 times more return on investment than Electronic Arts. However, Pure Storage is 2.31 times more volatile than Electronic Arts. It trades about 0.07 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.03 per unit of risk. If you would invest 2,568 in Pure Storage on October 17, 2024 and sell it today you would earn a total of 3,566 from holding Pure Storage or generate 138.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.62% |
| Values | Daily Returns |
Pure Storage vs. Electronic Arts
Performance |
| Timeline |
| Pure Storage |
| Electronic Arts |
Pure Storage and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and Electronic Arts
The main advantage of trading using opposite Pure Storage and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage 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.| Pure Storage vs. BANK OF CHINA | Pure Storage vs. NAKED WINES PLC | Pure Storage vs. Webster Financial | Pure Storage vs. Sun Life Financial |
| Electronic Arts vs. CanSino Biologics | Electronic Arts vs. Pure Storage | Electronic Arts vs. SCANSOURCE | Electronic Arts vs. BOSTON BEER A |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |