Correlation Between Credit Acceptance and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance 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 Credit Acceptance and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Electronic Arts, you can compare the effects of market volatilities on Credit Acceptance 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 Credit Acceptance with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Electronic Arts.
Diversification Opportunities for Credit Acceptance and Electronic Arts
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Credit and Electronic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance i.e., Credit Acceptance and Electronic Arts go up and down completely randomly.
Pair Corralation between Credit Acceptance and Electronic Arts
Assuming the 90 days trading horizon Credit Acceptance is expected to generate 1.31 times less return on investment than Electronic Arts. In addition to that, Credit Acceptance is 1.21 times more volatile than Electronic Arts. It trades about 0.03 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.05 per unit of volatility. If you would invest 33,850 in Electronic Arts on August 26, 2024 and sell it today you would earn a total of 14,694 from holding Electronic Arts or generate 43.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Credit Acceptance vs. Electronic Arts
Performance |
| Timeline |
| Credit Acceptance |
| Electronic Arts |
Credit Acceptance and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Electronic Arts
The main advantage of trading using opposite Credit Acceptance and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance 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.| Credit Acceptance vs. Tyson Foods | Credit Acceptance vs. Brpr Corporate Offices | Credit Acceptance vs. Take Two Interactive Software | Credit Acceptance vs. TAL Education Group |
| Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Fras le SA | Electronic Arts vs. Clave Indices De | Electronic Arts vs. BTG Pactual Logstica |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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