Correlation Between ELECTRONIC ARTS and BOSTON BEER
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and BOSTON BEER 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 BOSTON BEER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and BOSTON BEER A , you can compare the effects of market volatilities on ELECTRONIC ARTS and BOSTON BEER 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 BOSTON BEER. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and BOSTON BEER.
Diversification Opportunities for ELECTRONIC ARTS and BOSTON BEER
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ELECTRONIC and BOSTON is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and BOSTON BEER go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and BOSTON BEER
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.43 times more return on investment than BOSTON BEER. However, ELECTRONIC ARTS is 2.32 times less risky than BOSTON BEER. It trades about -0.26 of its potential returns per unit of risk. BOSTON BEER A is currently generating about -0.54 per unit of risk. If you would invest 14,268 in ELECTRONIC ARTS on October 25, 2024 and sell it today you would lose (498.00) from holding ELECTRONIC ARTS or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. BOSTON BEER A
Performance |
| Timeline |
| ELECTRONIC ARTS |
| BOSTON BEER A |
ELECTRONIC ARTS and BOSTON BEER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and BOSTON BEER
The main advantage of trading using opposite ELECTRONIC ARTS and BOSTON BEER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, BOSTON BEER 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 BOSTON BEER will offset losses from the drop in BOSTON BEER's long position.| ELECTRONIC ARTS vs. PURE FOODS TASMANIA | ELECTRONIC ARTS vs. THRACE PLASTICS | ELECTRONIC ARTS vs. PATTIES FOODS | ELECTRONIC ARTS vs. PLANT VEDA FOODS |
| BOSTON BEER vs. Aegean Airlines SA | BOSTON BEER vs. SINGAPORE AIRLINES | BOSTON BEER vs. AEGEAN AIRLINES | BOSTON BEER vs. United Airlines Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |