Correlation Between Electronic Arts and Albertsons Companies
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Albertsons Companies 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 Electronic Arts and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Albertsons Companies, you can compare the effects of market volatilities on Electronic Arts and Albertsons Companies 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 Electronic Arts with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Albertsons Companies.
Diversification Opportunities for Electronic Arts and Albertsons Companies
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Electronic and Albertsons is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Electronic Arts 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 Electronic Arts are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Electronic Arts i.e., Electronic Arts and Albertsons Companies go up and down completely randomly.
Pair Corralation between Electronic Arts and Albertsons Companies
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.77 times more return on investment than Albertsons Companies. However, Electronic Arts is 1.29 times less risky than Albertsons Companies. It trades about 0.57 of its potential returns per unit of risk. Albertsons Companies is currently generating about 0.13 per unit of risk. If you would invest 14,503 in Electronic Arts on August 25, 2024 and sell it today you would earn a total of 2,164 from holding Electronic Arts or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Albertsons Companies
Performance |
| Timeline |
| Electronic Arts |
| Albertsons Companies |
Electronic Arts and Albertsons Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Albertsons Companies
The main advantage of trading using opposite Electronic Arts and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.| Electronic Arts vs. Playstudios | Electronic Arts vs. Talkspace | Electronic Arts vs. Katapult Holdings Equity | Electronic Arts vs. Aquagold International |
| Albertsons Companies vs. Hf Foods Group | Albertsons Companies vs. Innovative Food Hldg | Albertsons Companies vs. Calavo Growers | Albertsons Companies vs. The Chefs Warehouse |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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