Correlation Between ELECTRONIC ARTS and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and Playtech Plc 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 Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Playtech plc, you can compare the effects of market volatilities on ELECTRONIC ARTS and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Playtech Plc.
Diversification Opportunities for ELECTRONIC ARTS and Playtech Plc
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between ELECTRONIC and Playtech is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Playtech Plc go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Playtech Plc
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to under-perform the Playtech Plc. In addition to that, ELECTRONIC ARTS is 1.38 times more volatile than Playtech plc. It trades about -0.56 of its total potential returns per unit of risk. Playtech plc is currently generating about -0.29 per unit of volatility. If you would invest 878.00 in Playtech plc on October 11, 2024 and sell it today you would lose (36.00) from holding Playtech plc or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. Playtech plc
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Playtech plc |
ELECTRONIC ARTS and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Playtech Plc
The main advantage of trading using opposite ELECTRONIC ARTS and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.| ELECTRONIC ARTS vs. Rocket Internet SE | ELECTRONIC ARTS vs. Advanced Medical Solutions | ELECTRONIC ARTS vs. Charter Communications | ELECTRONIC ARTS vs. ONWARD MEDICAL BV |
| Playtech Plc vs. Chesapeake Utilities | Playtech Plc vs. Universal Insurance Holdings | Playtech Plc vs. INSURANCE AUST GRP | Playtech Plc vs. Canadian Utilities Limited |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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