Correlation Between Electronic Arts and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Alaska Air 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 Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Alaska Air Group,, you can compare the effects of market volatilities on Electronic Arts and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Alaska Air.
Diversification Opportunities for Electronic Arts and Alaska Air
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electronic and Alaska is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Alaska Air Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group, 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group, has no effect on the direction of Electronic Arts i.e., Electronic Arts and Alaska Air go up and down completely randomly.
Pair Corralation between Electronic Arts and Alaska Air
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the Alaska Air. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.75 times less risky than Alaska Air. The stock trades about -0.06 of its potential returns per unit of risk. The Alaska Air Group, is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 22,198 in Alaska Air Group, on October 26, 2024 and sell it today you would earn a total of 19,682 from holding Alaska Air Group, or generate 88.67% 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. Alaska Air Group,
Performance |
| Timeline |
| Electronic Arts |
| Alaska Air Group, |
Electronic Arts and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Alaska Air
The main advantage of trading using opposite Electronic Arts and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Electronic Arts vs. Verizon Communications | Electronic Arts vs. United Natural Foods, | Electronic Arts vs. CRISPR Therapeutics AG | Electronic Arts vs. Capital One Financial |
| Alaska Air vs. Align Technology | Alaska Air vs. Seagate Technology Holdings | Alaska Air vs. Electronic Arts | Alaska Air vs. STMicroelectronics NV |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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