Correlation Between Electronic Arts and UbiSoft Entertainment
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and UbiSoft Entertainment 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 UbiSoft Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and UbiSoft Entertainment, you can compare the effects of market volatilities on Electronic Arts and UbiSoft Entertainment 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 UbiSoft Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and UbiSoft Entertainment.
Diversification Opportunities for Electronic Arts and UbiSoft Entertainment
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Electronic and UbiSoft is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and UbiSoft Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UbiSoft Entertainment 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 UbiSoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UbiSoft Entertainment has no effect on the direction of Electronic Arts i.e., Electronic Arts and UbiSoft Entertainment go up and down completely randomly.
Pair Corralation between Electronic Arts and UbiSoft Entertainment
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.28 times more return on investment than UbiSoft Entertainment. However, Electronic Arts is 3.62 times less risky than UbiSoft Entertainment. It trades about 0.15 of its potential returns per unit of risk. UbiSoft Entertainment is currently generating about -0.11 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. UbiSoft Entertainment
Performance |
| Timeline |
| Electronic Arts |
| UbiSoft Entertainment |
Electronic Arts and UbiSoft Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and UbiSoft Entertainment
The main advantage of trading using opposite Electronic Arts and UbiSoft Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, UbiSoft Entertainment 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 UbiSoft Entertainment will offset losses from the drop in UbiSoft Entertainment'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 |
| UbiSoft Entertainment vs. Playstudios | UbiSoft Entertainment vs. Doubledown Interactive Co | UbiSoft Entertainment vs. Bragg Gaming Group | UbiSoft Entertainment vs. Golden Matrix Group |
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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