Correlation Between Electronic Arts and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and APx Acquisition 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 APx Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and APx Acquisition I, you can compare the effects of market volatilities on Electronic Arts and APx Acquisition 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 APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and APx Acquisition.
Diversification Opportunities for Electronic Arts and APx Acquisition
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and APx is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I 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 APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of Electronic Arts i.e., Electronic Arts and APx Acquisition go up and down completely randomly.
Pair Corralation between Electronic Arts and APx Acquisition
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 1.31 times less return on investment than APx Acquisition. In addition to that, Electronic Arts is 4.79 times more volatile than APx Acquisition I. It trades about 0.02 of its total potential returns per unit of risk. APx Acquisition I is currently generating about 0.1 per unit of volatility. If you would invest 1,036 in APx Acquisition I on November 2, 2024 and sell it today you would earn a total of 154.00 from holding APx Acquisition I or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Electronic Arts vs. APx Acquisition I
Performance |
| Timeline |
| Electronic Arts |
| APx Acquisition I |
Electronic Arts and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and APx Acquisition
The main advantage of trading using opposite Electronic Arts and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition's long position.| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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