Correlation Between ELECTRONIC ARTS and TFS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and TFS FINANCIAL 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 TFS FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and TFS FINANCIAL, you can compare the effects of market volatilities on ELECTRONIC ARTS and TFS FINANCIAL 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 TFS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and TFS FINANCIAL.
Diversification Opportunities for ELECTRONIC ARTS and TFS FINANCIAL
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ELECTRONIC and TFS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and TFS FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFS FINANCIAL 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 TFS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFS FINANCIAL has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and TFS FINANCIAL go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and TFS FINANCIAL
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 0.77 times more return on investment than TFS FINANCIAL. However, ELECTRONIC ARTS is 1.3 times less risky than TFS FINANCIAL. It trades about 0.15 of its potential returns per unit of risk. TFS FINANCIAL is currently generating about 0.08 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. TFS FINANCIAL
Performance |
| Timeline |
| ELECTRONIC ARTS |
| TFS FINANCIAL |
ELECTRONIC ARTS and TFS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and TFS FINANCIAL
The main advantage of trading using opposite ELECTRONIC ARTS and TFS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, TFS FINANCIAL 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 TFS FINANCIAL will offset losses from the drop in TFS FINANCIAL'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 |
| TFS FINANCIAL vs. SIVERS SEMICONDUCTORS AB | TFS FINANCIAL vs. Darden Restaurants | TFS FINANCIAL vs. Reliance Steel Aluminum | TFS FINANCIAL vs. Q2M Managementberatung AG |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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