Correlation Between Electronic Arts and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Liberty Media 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 Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Liberty Media, you can compare the effects of market volatilities on Electronic Arts and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Liberty Media.
Diversification Opportunities for Electronic Arts and Liberty Media
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronic and Liberty is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of Electronic Arts i.e., Electronic Arts and Liberty Media go up and down completely randomly.
Pair Corralation between Electronic Arts and Liberty Media
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 7.93 times less return on investment than Liberty Media. But when comparing it to its historical volatility, Electronic Arts is 1.81 times less risky than Liberty Media. It trades about 0.1 of its potential returns per unit of risk. Liberty Media is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 4,037 in Liberty Media on August 30, 2024 and sell it today you would earn a total of 3,280 from holding Liberty Media or generate 81.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Liberty Media
Performance |
| Timeline |
| Electronic Arts |
| Liberty Media |
Electronic Arts and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Liberty Media
The main advantage of trading using opposite Electronic Arts and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media'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 |
| Liberty Media vs. 17 Education Technology | Liberty Media vs. Udemy Inc | Liberty Media vs. Coursera | Liberty Media vs. Peoples Educational Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |