Correlation Between DFS Furniture and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Electronic Arts, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Electronic Arts.
Diversification Opportunities for DFS Furniture and Electronic Arts
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DFS and Electronic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and DFS Furniture 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 DFS Furniture 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 DFS Furniture i.e., DFS Furniture and Electronic Arts go up and down completely randomly.
Pair Corralation between DFS Furniture and Electronic Arts
Assuming the 90 days trading horizon DFS Furniture is expected to generate 3.43 times less return on investment than Electronic Arts. In addition to that, DFS Furniture is 1.75 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 0.05 per unit of volatility. If you would invest 12,311 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 4,040 from holding Electronic Arts or generate 32.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
DFS Furniture PLC vs. Electronic Arts
Performance |
| Timeline |
| DFS Furniture PLC |
| Electronic Arts |
DFS Furniture and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Electronic Arts
The main advantage of trading using opposite DFS Furniture and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. Ondine Biomedical | DFS Furniture vs. Europa Metals | DFS Furniture vs. Lendinvest PLC | DFS Furniture vs. Neometals |
| Electronic Arts vs. Lendinvest PLC | Electronic Arts vs. Neometals | Electronic Arts vs. Albion Technology General | Electronic Arts vs. Jupiter Fund Management |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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