Correlation Between ELECTRONIC ARTS and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and GFL ENVIRONM 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 GFL ENVIRONM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and GFL ENVIRONM, you can compare the effects of market volatilities on ELECTRONIC ARTS and GFL ENVIRONM 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 GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and GFL ENVIRONM.
Diversification Opportunities for ELECTRONIC ARTS and GFL ENVIRONM
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ELECTRONIC and GFL is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM 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 GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and GFL ENVIRONM
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.64 times more return on investment than GFL ENVIRONM. However, ELECTRONIC ARTS is 1.56 times less risky than GFL ENVIRONM. It trades about 0.53 of its potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.29 per unit of risk. If you would invest 13,440 in ELECTRONIC ARTS on August 24, 2024 and sell it today you would earn a total of 2,324 from holding ELECTRONIC ARTS or generate 17.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. GFL ENVIRONM
Performance |
| Timeline |
| ELECTRONIC ARTS |
| GFL ENVIRONM |
ELECTRONIC ARTS and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and GFL ENVIRONM
The main advantage of trading using opposite ELECTRONIC ARTS and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc |
| GFL ENVIRONM vs. HEALTHCARE REAL A | GFL ENVIRONM vs. Transportadora de Gas | GFL ENVIRONM vs. Texas Roadhouse | GFL ENVIRONM vs. ATRYS HEALTH SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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