Correlation Between GlobalData PLC and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both GlobalData PLC 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 GlobalData PLC and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalData PLC and Electronic Arts, you can compare the effects of market volatilities on GlobalData PLC 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 GlobalData PLC with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalData PLC and Electronic Arts.
Diversification Opportunities for GlobalData PLC and Electronic Arts
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlobalData and Electronic is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData PLC and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and GlobalData PLC 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 GlobalData PLC 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 GlobalData PLC i.e., GlobalData PLC and Electronic Arts go up and down completely randomly.
Pair Corralation between GlobalData PLC and Electronic Arts
Assuming the 90 days trading horizon GlobalData PLC is expected to generate 0.44 times more return on investment than Electronic Arts. However, GlobalData PLC is 2.27 times less risky than Electronic Arts. It trades about -0.26 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.19 per unit of risk. If you would invest 20,200 in GlobalData PLC on November 7, 2024 and sell it today you would lose (2,000) from holding GlobalData PLC or give up 9.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalData PLC vs. Electronic Arts
Performance |
| Timeline |
| GlobalData PLC |
| Electronic Arts |
GlobalData PLC and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalData PLC and Electronic Arts
The main advantage of trading using opposite GlobalData PLC and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalData PLC 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.| GlobalData PLC vs. Dairy Farm International | GlobalData PLC vs. Bell Food Group | GlobalData PLC vs. Infrastrutture Wireless Italiane | GlobalData PLC vs. Sligro Food Group |
| Electronic Arts vs. New Residential Investment | Electronic Arts vs. CAP LEASE AVIATION | Electronic Arts vs. Livermore Investments Group | Electronic Arts vs. Alaska Air 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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