Correlation Between Electrica and Gaming Realms
Can any of the company-specific risk be diversified away by investing in both Electrica and Gaming Realms 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 Electrica and Gaming Realms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electrica SA and Gaming Realms plc, you can compare the effects of market volatilities on Electrica and Gaming Realms 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 Electrica with a short position of Gaming Realms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrica and Gaming Realms.
Diversification Opportunities for Electrica and Gaming Realms
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electrica and Gaming is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Electrica SA and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms plc and Electrica 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 Electrica SA are associated (or correlated) with Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Electrica i.e., Electrica and Gaming Realms go up and down completely randomly.
Pair Corralation between Electrica and Gaming Realms
If you would invest 1,300 in Electrica SA on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Electrica SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electrica SA vs. Gaming Realms plc
Performance |
| Timeline |
| Electrica SA |
| Gaming Realms plc |
Electrica and Gaming Realms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electrica and Gaming Realms
The main advantage of trading using opposite Electrica and Gaming Realms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrica position performs unexpectedly, Gaming Realms 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 Gaming Realms will offset losses from the drop in Gaming Realms' long position.| Electrica vs. Darden Restaurants | Electrica vs. CVS Health Corp | Electrica vs. Various Eateries PLC | Electrica vs. Fulcrum Metals PLC |
| Gaming Realms vs. Anglesey Mining | Gaming Realms vs. GoldMining | Gaming Realms vs. METALL ZUG AG | Gaming Realms vs. Gamma Communications PLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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