Correlation Between Electronic Arts and UBS Group
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and UBS Group 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 UBS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and UBS Group AG, you can compare the effects of market volatilities on Electronic Arts and UBS Group 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 UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and UBS Group.
Diversification Opportunities for Electronic Arts and UBS Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Electronic and UBS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Electronic Arts i.e., Electronic Arts and UBS Group go up and down completely randomly.
Pair Corralation between Electronic Arts and UBS Group
Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.87 times less return on investment than UBS Group. But when comparing it to its historical volatility, Electronic Arts is 1.34 times less risky than UBS Group. It trades about 0.07 of its potential returns per unit of risk. UBS Group AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,118 in UBS Group AG on September 12, 2024 and sell it today you would earn a total of 10,822 from holding UBS Group AG or generate 118.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.99% |
| Values | Daily Returns |
Electronic Arts vs. UBS Group AG
Performance |
| Timeline |
| Electronic Arts |
| UBS Group AG |
Electronic Arts and UBS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and UBS Group
The main advantage of trading using opposite Electronic Arts and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, UBS Group 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 UBS Group will offset losses from the drop in UBS Group's long position.| Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Bilibili | Electronic Arts vs. Fundo Investimento Imobiliario | Electronic Arts vs. LESTE FDO INV |
| UBS Group vs. Electronic Arts | UBS Group vs. Metalurgica Gerdau SA | UBS Group vs. Zoom Video Communications | UBS Group vs. United Rentals |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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