Correlation Between Electronic Arts and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and KVH Industries 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 KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and KVH Industries, you can compare the effects of market volatilities on Electronic Arts and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and KVH Industries.
Diversification Opportunities for Electronic Arts and KVH Industries
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electronic and KVH is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Electronic Arts i.e., Electronic Arts and KVH Industries go up and down completely randomly.
Pair Corralation between Electronic Arts and KVH Industries
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.52 times more return on investment than KVH Industries. However, Electronic Arts is 1.93 times less risky than KVH Industries. It trades about 0.58 of its potential returns per unit of risk. KVH Industries is currently generating about 0.22 per unit of risk. If you would invest 14,486 in Electronic Arts on August 24, 2024 and sell it today you would earn a total of 2,181 from holding Electronic Arts or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. KVH Industries
Performance |
| Timeline |
| Electronic Arts |
| KVH Industries |
Electronic Arts and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and KVH Industries
The main advantage of trading using opposite Electronic Arts and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Electronic Arts vs. Nintendo Co ADR | Electronic Arts vs. Roblox Corp | Electronic Arts vs. NetEase | Electronic Arts vs. Take Two Interactive Software |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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