Correlation Between Electronic Arts and Mastercard Incorporated
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Mastercard Incorporated 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 Mastercard Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Mastercard Incorporated, you can compare the effects of market volatilities on Electronic Arts and Mastercard Incorporated 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 Mastercard Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Mastercard Incorporated.
Diversification Opportunities for Electronic Arts and Mastercard Incorporated
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Electronic and Mastercard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated 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 Mastercard Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard Incorporated has no effect on the direction of Electronic Arts i.e., Electronic Arts and Mastercard Incorporated go up and down completely randomly.
Pair Corralation between Electronic Arts and Mastercard Incorporated
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the Mastercard Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.18 times less risky than Mastercard Incorporated. The stock trades about -0.37 of its potential returns per unit of risk. The Mastercard Incorporated is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,412 in Mastercard Incorporated on October 1, 2024 and sell it today you would earn a total of 304.00 from holding Mastercard Incorporated or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Mastercard Incorporated
Performance |
| Timeline |
| Electronic Arts |
| Mastercard Incorporated |
Electronic Arts and Mastercard Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Mastercard Incorporated
The main advantage of trading using opposite Electronic Arts and Mastercard Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Mastercard Incorporated 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 Mastercard Incorporated will offset losses from the drop in Mastercard Incorporated's long position.The idea behind Electronic Arts and Mastercard Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mastercard Incorporated vs. Visa Inc | Mastercard Incorporated vs. American Express | Mastercard Incorporated vs. PayPal Holdings | Mastercard Incorporated vs. The Western Union |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |