Correlation Between Electronic Arts and IQIYI
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and IQIYI 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 IQIYI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and iQIYI Inc, you can compare the effects of market volatilities on Electronic Arts and IQIYI 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 IQIYI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and IQIYI.
Diversification Opportunities for Electronic Arts and IQIYI
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and IQIYI is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and iQIYI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iQIYI Inc 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 IQIYI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iQIYI Inc has no effect on the direction of Electronic Arts i.e., Electronic Arts and IQIYI go up and down completely randomly.
Pair Corralation between Electronic Arts and IQIYI
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.27 times more return on investment than IQIYI. However, Electronic Arts is 3.73 times less risky than IQIYI. It trades about 0.15 of its potential returns per unit of risk. iQIYI Inc is currently generating about -0.12 per unit of risk. If you would invest 13,267 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 3,043 from holding Electronic Arts or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. iQIYI Inc
Performance |
| Timeline |
| Electronic Arts |
| iQIYI Inc |
Electronic Arts and IQIYI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and IQIYI
The main advantage of trading using opposite Electronic Arts and IQIYI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, IQIYI 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 IQIYI will offset losses from the drop in IQIYI'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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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