Correlation Between ELECTRONIC ARTS and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and ARROW ELECTRONICS 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 ARROW ELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and ARROW ELECTRONICS, you can compare the effects of market volatilities on ELECTRONIC ARTS and ARROW ELECTRONICS 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 ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and ARROW ELECTRONICS.
Diversification Opportunities for ELECTRONIC ARTS and ARROW ELECTRONICS
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELECTRONIC and ARROW is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS 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 ARROW ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARROW ELECTRONICS has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and ARROW ELECTRONICS
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.39 times more return on investment than ARROW ELECTRONICS. However, ELECTRONIC ARTS is 2.56 times less risky than ARROW ELECTRONICS. It trades about 0.58 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about -0.05 per unit of risk. If you would invest 13,484 in ELECTRONIC ARTS on August 27, 2024 and sell it today you would earn a total of 2,456 from holding ELECTRONIC ARTS or generate 18.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. ARROW ELECTRONICS
Performance |
| Timeline |
| ELECTRONIC ARTS |
| ARROW ELECTRONICS |
ELECTRONIC ARTS and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and ARROW ELECTRONICS
The main advantage of trading using opposite ELECTRONIC ARTS and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, ARROW ELECTRONICS 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 ARROW ELECTRONICS will offset losses from the drop in ARROW ELECTRONICS's long position.| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Microsoft |
| ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Apple Inc | ARROW ELECTRONICS vs. Microsoft |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |