Correlation Between Canadian General and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Canadian General 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 Canadian General and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and Electronic Arts, you can compare the effects of market volatilities on Canadian General 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 Canadian General with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Electronic Arts.
Diversification Opportunities for Canadian General and Electronic Arts
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and Electronic is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Canadian General 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 Canadian General Investments 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 Canadian General i.e., Canadian General and Electronic Arts go up and down completely randomly.
Pair Corralation between Canadian General and Electronic Arts
Assuming the 90 days trading horizon Canadian General Investments is expected to generate 0.99 times more return on investment than Electronic Arts. However, Canadian General Investments is 1.01 times less risky than Electronic Arts. It trades about 0.04 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.02 per unit of risk. If you would invest 184,893 in Canadian General Investments on October 30, 2024 and sell it today you would earn a total of 46,107 from holding Canadian General Investments or generate 24.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Canadian General Investments vs. Electronic Arts
Performance |
| Timeline |
| Canadian General Inv |
| Electronic Arts |
Canadian General and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Electronic Arts
The main advantage of trading using opposite Canadian General and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General 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.| Canadian General vs. Cornish Metals | Canadian General vs. Beeks Trading | Canadian General vs. OneSavings Bank PLC | Canadian General vs. Ecclesiastical Insurance Office |
| Electronic Arts vs. Zegona Communications Plc | Electronic Arts vs. JD Sports Fashion | Electronic Arts vs. Ondine Biomedical | Electronic Arts vs. Mobile Tornado Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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