Correlation Between Electronic Arts and Bank of Botetourt
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Bank of Botetourt 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 Bank of Botetourt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Bank of Botetourt, you can compare the effects of market volatilities on Electronic Arts and Bank of Botetourt 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 Bank of Botetourt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Bank of Botetourt.
Diversification Opportunities for Electronic Arts and Bank of Botetourt
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electronic and Bank is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Bank of Botetourt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Botetourt 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 Bank of Botetourt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Botetourt has no effect on the direction of Electronic Arts i.e., Electronic Arts and Bank of Botetourt go up and down completely randomly.
Pair Corralation between Electronic Arts and Bank of Botetourt
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 1.89 times less return on investment than Bank of Botetourt. But when comparing it to its historical volatility, Electronic Arts is 1.22 times less risky than Bank of Botetourt. It trades about 0.02 of its potential returns per unit of risk. Bank of Botetourt is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,771 in Bank of Botetourt on November 2, 2024 and sell it today you would earn a total of 454.00 from holding Bank of Botetourt or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.72% |
| Values | Daily Returns |
Electronic Arts vs. Bank of Botetourt
Performance |
| Timeline |
| Electronic Arts |
| Bank of Botetourt |
Electronic Arts and Bank of Botetourt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Bank of Botetourt
The main advantage of trading using opposite Electronic Arts and Bank of Botetourt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Bank of Botetourt 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 Bank of Botetourt will offset losses from the drop in Bank of Botetourt'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 |
| Bank of Botetourt vs. Century Financial Corp | Bank of Botetourt vs. FS Bancorp | Bank of Botetourt vs. Lyons Bancorp | Bank of Botetourt vs. Solvay Bank 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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