Correlation Between BIONTECH and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both BIONTECH 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 BIONTECH and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BIONTECH SE DRN and Electronic Arts, you can compare the effects of market volatilities on BIONTECH 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 BIONTECH with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIONTECH and Electronic Arts.
Diversification Opportunities for BIONTECH and Electronic Arts
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BIONTECH and Electronic is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BIONTECH SE DRN and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and BIONTECH 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 BIONTECH SE DRN 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 BIONTECH i.e., BIONTECH and Electronic Arts go up and down completely randomly.
Pair Corralation between BIONTECH and Electronic Arts
Assuming the 90 days trading horizon BIONTECH SE DRN is expected to under-perform the Electronic Arts. In addition to that, BIONTECH is 1.71 times more volatile than Electronic Arts. It trades about 0.0 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.07 per unit of volatility. If you would invest 31,113 in Electronic Arts on September 12, 2024 and sell it today you would earn a total of 19,037 from holding Electronic Arts or generate 61.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
BIONTECH SE DRN vs. Electronic Arts
Performance |
| Timeline |
| BIONTECH SE DRN |
| Electronic Arts |
BIONTECH and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BIONTECH and Electronic Arts
The main advantage of trading using opposite BIONTECH and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIONTECH 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 BIONTECH SE DRN 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.| Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Bilibili | Electronic Arts vs. Fundo Investimento Imobiliario | Electronic Arts vs. LESTE FDO INV |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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