Correlation Between Bank Of and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Bank Of 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 Bank Of and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and Electronic Arts, you can compare the effects of market volatilities on Bank Of 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 Bank Of with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and Electronic Arts.
Diversification Opportunities for Bank Of and Electronic Arts
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Electronic is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Bank Of 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 The Bank of 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 Bank Of i.e., Bank Of and Electronic Arts go up and down completely randomly.
Pair Corralation between Bank Of and Electronic Arts
Assuming the 90 days trading horizon The Bank of is expected to generate 1.1 times more return on investment than Electronic Arts. However, Bank Of is 1.1 times more volatile than Electronic Arts. It trades about 0.42 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.41 per unit of risk. If you would invest 38,571 in The Bank of on August 30, 2024 and sell it today you would earn a total of 9,652 from holding The Bank of or generate 25.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. Electronic Arts
Performance |
| Timeline |
| The Bank |
| Electronic Arts |
Bank Of and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of and Electronic Arts
The main advantage of trading using opposite Bank Of and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of 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.| Bank Of vs. STMicroelectronics NV | Bank Of vs. Credit Acceptance | Bank Of vs. HDFC Bank Limited | Bank Of vs. Mitsubishi UFJ Financial |
| Electronic Arts vs. Bemobi Mobile Tech | Electronic Arts vs. Waste Management | Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Bank of America |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |