Correlation Between ELECTRONIC ARTS and Graphic Packaging
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and Graphic Packaging 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 Graphic Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Graphic Packaging Holding, you can compare the effects of market volatilities on ELECTRONIC ARTS and Graphic Packaging 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 Graphic Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Graphic Packaging.
Diversification Opportunities for ELECTRONIC ARTS and Graphic Packaging
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELECTRONIC and Graphic is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding 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 Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Graphic Packaging go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Graphic Packaging
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 1.22 times less return on investment than Graphic Packaging. But when comparing it to its historical volatility, ELECTRONIC ARTS is 1.19 times less risky than Graphic Packaging. It trades about 0.05 of its potential returns per unit of risk. Graphic Packaging Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,029 in Graphic Packaging Holding on September 3, 2024 and sell it today you would earn a total of 776.00 from holding Graphic Packaging Holding or generate 38.25% 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. Graphic Packaging Holding
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Graphic Packaging Holding |
ELECTRONIC ARTS and Graphic Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Graphic Packaging
The main advantage of trading using opposite ELECTRONIC ARTS and Graphic Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, Graphic Packaging 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 Graphic Packaging will offset losses from the drop in Graphic Packaging's long position.| ELECTRONIC ARTS vs. FEMALE HEALTH | ELECTRONIC ARTS vs. DiamondRock Hospitality | ELECTRONIC ARTS vs. SHIP HEALTHCARE HLDGINC | ELECTRONIC ARTS vs. YOOMA WELLNESS INC |
| Graphic Packaging vs. ELECTRONIC ARTS | Graphic Packaging vs. Nucletron Electronic Aktiengesellschaft | Graphic Packaging vs. UET United Electronic | Graphic Packaging vs. AOI Electronics Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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