Correlation Between Electronic Arts and News Corp
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and News Corp 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 News Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and News Corp A, you can compare the effects of market volatilities on Electronic Arts and News Corp 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 News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and News Corp.
Diversification Opportunities for Electronic Arts and News Corp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electronic and News is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and News Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp A 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 News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp A has no effect on the direction of Electronic Arts i.e., Electronic Arts and News Corp go up and down completely randomly.
Pair Corralation between Electronic Arts and News Corp
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.99 times more return on investment than News Corp. However, Electronic Arts is 1.01 times less risky than News Corp. It trades about 0.43 of its potential returns per unit of risk. News Corp A is currently generating about 0.23 per unit of risk. If you would invest 14,545 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 1,765 from holding Electronic Arts or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. News Corp A
Performance |
| Timeline |
| Electronic Arts |
| News Corp A |
Electronic Arts and News Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and News Corp
The main advantage of trading using opposite Electronic Arts and News Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, News Corp 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 News Corp will offset losses from the drop in News Corp'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 |
| News Corp vs. Marcus | News Corp vs. Liberty Media | News Corp vs. Warner Music Group | News Corp vs. Fox Corp Class |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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