Correlation Between ELECTRONIC ARTS and Chiba Bank
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and Chiba Bank 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 Chiba Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Chiba Bank, you can compare the effects of market volatilities on ELECTRONIC ARTS and Chiba Bank 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 Chiba Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Chiba Bank.
Diversification Opportunities for ELECTRONIC ARTS and Chiba Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELECTRONIC and Chiba is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and Chiba Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank 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 Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Chiba Bank go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Chiba Bank
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.47 times more return on investment than Chiba Bank. However, ELECTRONIC ARTS is 2.14 times less risky than Chiba Bank. It trades about 0.15 of its potential returns per unit of risk. Chiba Bank is currently generating about 0.0 per unit of risk. If you would invest 12,124 in ELECTRONIC ARTS on September 2, 2024 and sell it today you would earn a total of 3,296 from holding ELECTRONIC ARTS or generate 27.19% 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. Chiba Bank
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Chiba Bank |
ELECTRONIC ARTS and Chiba Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Chiba Bank
The main advantage of trading using opposite ELECTRONIC ARTS and Chiba Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, Chiba Bank 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 Chiba Bank will offset losses from the drop in Chiba Bank's long position.| ELECTRONIC ARTS vs. PTT Global Chemical | ELECTRONIC ARTS vs. Eastman Chemical | ELECTRONIC ARTS vs. NISSAN CHEMICAL IND | ELECTRONIC ARTS vs. Silicon Motion Technology |
| Chiba Bank vs. Platinum Investment Management | Chiba Bank vs. Waste Management | Chiba Bank vs. CeoTronics AG | Chiba Bank vs. Elmos Semiconductor SE |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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