Correlation Between Electronic Arts and Unity Software
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Unity Software 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 Unity Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Unity Software, you can compare the effects of market volatilities on Electronic Arts and Unity Software 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 Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Unity Software.
Diversification Opportunities for Electronic Arts and Unity Software
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electronic and Unity is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Electronic Arts i.e., Electronic Arts and Unity Software go up and down completely randomly.
Pair Corralation between Electronic Arts and Unity Software
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.27 times more return on investment than Unity Software. However, Electronic Arts is 3.68 times less risky than Unity Software. It trades about 0.42 of its potential returns per unit of risk. Unity Software is currently generating about 0.07 per unit of risk. If you would invest 39,005 in Electronic Arts on August 29, 2024 and sell it today you would earn a total of 8,638 from holding Electronic Arts or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Electronic Arts vs. Unity Software
Performance |
| Timeline |
| Electronic Arts |
| Unity Software |
Electronic Arts and Unity Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Unity Software
The main advantage of trading using opposite Electronic Arts and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software's long position.| Electronic Arts vs. Bemobi Mobile Tech | Electronic Arts vs. Waste Management | Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Bank of America |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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