Correlation Between ELECTRONIC ARTS and Boiron SA
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and Boiron SA 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 Boiron SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Boiron SA, you can compare the effects of market volatilities on ELECTRONIC ARTS and Boiron SA 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 Boiron SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Boiron SA.
Diversification Opportunities for ELECTRONIC ARTS and Boiron SA
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELECTRONIC and Boiron is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA 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 Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Boiron SA go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Boiron SA
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.89 times more return on investment than Boiron SA. However, ELECTRONIC ARTS is 1.12 times less risky than Boiron SA. It trades about 0.58 of its potential returns per unit of risk. Boiron SA is currently generating about -0.47 per unit of risk. If you would invest 13,484 in ELECTRONIC ARTS on August 28, 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. Boiron SA
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Boiron SA |
ELECTRONIC ARTS and Boiron SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Boiron SA
The main advantage of trading using opposite ELECTRONIC ARTS and Boiron SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, Boiron SA 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 Boiron SA will offset losses from the drop in Boiron SA's long position.| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Microsoft |
| Boiron SA vs. Pfizer Inc | Boiron SA vs. Superior Plus Corp | Boiron SA vs. Origin Agritech | Boiron SA vs. Identiv |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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