Correlation Between ELECTRONIC ARTS and Avanos Medical
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and Avanos Medical 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 Avanos Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Avanos Medical, you can compare the effects of market volatilities on ELECTRONIC ARTS and Avanos Medical 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 Avanos Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Avanos Medical.
Diversification Opportunities for ELECTRONIC ARTS and Avanos Medical
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ELECTRONIC and Avanos is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and Avanos Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanos Medical 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 Avanos Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanos Medical has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Avanos Medical go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Avanos Medical
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.51 times more return on investment than Avanos Medical. However, ELECTRONIC ARTS is 1.97 times less risky than Avanos Medical. It trades about 0.08 of its potential returns per unit of risk. Avanos Medical is currently generating about 0.0 per unit of risk. If you would invest 12,091 in ELECTRONIC ARTS on September 14, 2024 and sell it today you would earn a total of 3,437 from holding ELECTRONIC ARTS or generate 28.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. Avanos Medical
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Avanos Medical |
ELECTRONIC ARTS and Avanos Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Avanos Medical
The main advantage of trading using opposite ELECTRONIC ARTS and Avanos Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, Avanos Medical 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 Avanos Medical will offset losses from the drop in Avanos Medical's long position.| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc |
| Avanos Medical vs. CARSALESCOM | Avanos Medical vs. GOODYEAR T RUBBER | Avanos Medical vs. Carsales | Avanos Medical vs. NEWELL RUBBERMAID |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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