Correlation Between Daily Journal and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Daily Journal 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 Daily Journal and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daily Journal Corp and Electronic Arts, you can compare the effects of market volatilities on Daily Journal 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 Daily Journal with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daily Journal and Electronic Arts.
Diversification Opportunities for Daily Journal and Electronic Arts
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daily and Electronic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Daily Journal 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 Daily Journal Corp 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 Daily Journal i.e., Daily Journal and Electronic Arts go up and down completely randomly.
Pair Corralation between Daily Journal and Electronic Arts
Given the investment horizon of 90 days Daily Journal Corp is expected to generate 3.23 times more return on investment than Electronic Arts. However, Daily Journal is 3.23 times more volatile than Electronic Arts. It trades about 0.16 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.44 per unit of risk. If you would invest 50,225 in Daily Journal Corp on August 30, 2024 and sell it today you would earn a total of 6,326 from holding Daily Journal Corp or generate 12.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daily Journal Corp vs. Electronic Arts
Performance |
| Timeline |
| Daily Journal Corp |
| Electronic Arts |
Daily Journal and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daily Journal and Electronic Arts
The main advantage of trading using opposite Daily Journal and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daily Journal 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.| Daily Journal vs. Meridianlink | Daily Journal vs. CoreCard Corp | Daily Journal vs. Enfusion | Daily Journal vs. Issuer Direct Corp |
| Electronic Arts vs. Nintendo Co ADR | Electronic Arts vs. Roblox Corp | Electronic Arts vs. NetEase | Electronic Arts vs. Take Two Interactive Software |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |