Correlation Between Apple and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and ELECTRONIC ARTS, you can compare the effects of market volatilities on Apple 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 Apple with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and ELECTRONIC ARTS.
Diversification Opportunities for Apple and ELECTRONIC ARTS
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and ELECTRONIC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and Apple 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 Apple Inc 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 Apple i.e., Apple and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between Apple and ELECTRONIC ARTS
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.17 times more return on investment than ELECTRONIC ARTS. However, Apple is 1.17 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 0.08 per unit of risk. If you would invest 17,218 in Apple Inc on August 24, 2024 and sell it today you would earn a total of 4,687 from holding Apple Inc or generate 27.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. ELECTRONIC ARTS
Performance |
| Timeline |
| Apple Inc |
| ELECTRONIC ARTS |
Apple and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and ELECTRONIC ARTS
The main advantage of trading using opposite Apple and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Fukuyama Transporting Co | Apple vs. CODERE ONLINE LUX | Apple vs. MUTUIONLINE | Apple vs. SALESFORCE INC CDR |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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