Correlation Between Check Point and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Check Point 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 Check Point and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Electronic Arts, you can compare the effects of market volatilities on Check Point 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 Check Point with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Electronic Arts.
Diversification Opportunities for Check Point and Electronic Arts
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Electronic is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Check Point 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 Check Point Software 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 Check Point i.e., Check Point and Electronic Arts go up and down completely randomly.
Pair Corralation between Check Point and Electronic Arts
Assuming the 90 days trading horizon Check Point is expected to generate 13.38 times less return on investment than Electronic Arts. In addition to that, Check Point is 1.94 times more volatile than Electronic Arts. It trades about 0.01 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.19 per unit of volatility. If you would invest 13,580 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 1,910 from holding Electronic Arts or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Electronic Arts
Performance |
| Timeline |
| Check Point Software |
| Electronic Arts |
Check Point and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Electronic Arts
The main advantage of trading using opposite Check Point and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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.| Check Point vs. CVW CLEANTECH INC | Check Point vs. NorAm Drilling AS | Check Point vs. BORR DRILLING NEW | Check Point vs. Clean Energy Fuels |
| Electronic Arts vs. URBAN OUTFITTERS | Electronic Arts vs. Astral Foods Limited | Electronic Arts vs. JJ SNACK FOODS | Electronic Arts vs. CarsalesCom |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |