Correlation Between ELECTRONIC ARTS and New Residential
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and New Residential 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 New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and New Residential Investment, you can compare the effects of market volatilities on ELECTRONIC ARTS and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and New Residential.
Diversification Opportunities for ELECTRONIC ARTS and New Residential
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELECTRONIC and New is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and New Residential go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and New Residential
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 1.3 times more return on investment than New Residential. However, ELECTRONIC ARTS is 1.3 times more volatile than New Residential Investment. It trades about 0.42 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.36 per unit of risk. If you would invest 13,611 in ELECTRONIC ARTS on September 1, 2024 and sell it today you would earn a total of 1,809 from holding ELECTRONIC ARTS or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. New Residential Investment
Performance |
| Timeline |
| ELECTRONIC ARTS |
| New Residential Inve |
ELECTRONIC ARTS and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and New Residential
The main advantage of trading using opposite ELECTRONIC ARTS and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| ELECTRONIC ARTS vs. SIVERS SEMICONDUCTORS AB | ELECTRONIC ARTS vs. Darden Restaurants | ELECTRONIC ARTS vs. Reliance Steel Aluminum | ELECTRONIC ARTS vs. Q2M Managementberatung AG |
| New Residential vs. TRAINLINE PLC LS | New Residential vs. Soken Chemical Engineering | New Residential vs. Siamgas And Petrochemicals | New Residential vs. SEKISUI CHEMICAL |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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