Correlation Between Electronic Arts and Color Star
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Color Star 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 Color Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Color Star Technology, you can compare the effects of market volatilities on Electronic Arts and Color Star 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 Color Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Color Star.
Diversification Opportunities for Electronic Arts and Color Star
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and Color is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Color Star Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Color Star Technology 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 Color Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Color Star Technology has no effect on the direction of Electronic Arts i.e., Electronic Arts and Color Star go up and down completely randomly.
Pair Corralation between Electronic Arts and Color Star
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.1 times more return on investment than Color Star. However, Electronic Arts is 9.64 times less risky than Color Star. It trades about 0.58 of its potential returns per unit of risk. Color Star Technology is currently generating about -0.46 per unit of risk. If you would invest 14,520 in Electronic Arts on August 26, 2024 and sell it today you would earn a total of 2,147 from holding Electronic Arts or generate 14.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Color Star Technology
Performance |
| Timeline |
| Electronic Arts |
| Color Star Technology |
Electronic Arts and Color Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Color Star
The main advantage of trading using opposite Electronic Arts and Color Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Color Star 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 Color Star will offset losses from the drop in Color Star's long position.| Electronic Arts vs. Playstudios | Electronic Arts vs. Talkspace | Electronic Arts vs. Katapult Holdings Equity | Electronic Arts vs. Aquagold International |
| Color Star vs. ADTRAN Inc | Color Star vs. Belden Inc | Color Star vs. ADC Therapeutics SA | Color Star vs. Comtech Telecommunications Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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