Correlation Between Electronic Arts and Under Armour
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Under Armour 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 Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Under Armour, you can compare the effects of market volatilities on Electronic Arts and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Under Armour.
Diversification Opportunities for Electronic Arts and Under Armour
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Electronic and Under is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Under Armour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour has no effect on the direction of Electronic Arts i.e., Electronic Arts and Under Armour go up and down completely randomly.
Pair Corralation between Electronic Arts and Under Armour
Assuming the 90 days trading horizon Electronic Arts is expected to generate 2.02 times less return on investment than Under Armour. But when comparing it to its historical volatility, Electronic Arts is 1.54 times less risky than Under Armour. It trades about 0.15 of its potential returns per unit of risk. Under Armour is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,080 in Under Armour on September 14, 2024 and sell it today you would earn a total of 374.00 from holding Under Armour or generate 7.36% 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. Under Armour
Performance |
| Timeline |
| Electronic Arts |
| Under Armour |
Electronic Arts and Under Armour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Under Armour
The main advantage of trading using opposite Electronic Arts and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.| Electronic Arts vs. MAHLE Metal Leve | Electronic Arts vs. British American Tobacco | Electronic Arts vs. Global X Funds | Electronic Arts vs. New Oriental Education |
| Under Armour vs. Charter Communications | Under Armour vs. Broadcom | Under Armour vs. Electronic Arts | Under Armour vs. Delta Air Lines |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |