Correlation Between Electronic Arts and Capcom Co
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Capcom Co 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 Capcom Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Capcom Co, you can compare the effects of market volatilities on Electronic Arts and Capcom Co 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 Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Capcom Co.
Diversification Opportunities for Electronic Arts and Capcom Co
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electronic and Capcom is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Capcom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co 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 Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of Electronic Arts i.e., Electronic Arts and Capcom Co go up and down completely randomly.
Pair Corralation between Electronic Arts and Capcom Co
Assuming the 90 days horizon Electronic Arts is expected to under-perform the Capcom Co. In addition to that, Electronic Arts is 1.66 times more volatile than Capcom Co. It trades about -0.17 of its total potential returns per unit of risk. Capcom Co is currently generating about 0.1 per unit of volatility. If you would invest 2,131 in Capcom Co on November 3, 2024 and sell it today you would earn a total of 106.00 from holding Capcom Co or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. Capcom Co
Performance |
| Timeline |
| Electronic Arts |
| Capcom Co |
Electronic Arts and Capcom Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Capcom Co
The main advantage of trading using opposite Electronic Arts and Capcom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Capcom Co 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 Capcom Co will offset losses from the drop in Capcom Co's long position.| Electronic Arts vs. PREMIER FOODS | Electronic Arts vs. Align Technology | Electronic Arts vs. Firan Technology Group | Electronic Arts vs. Casio Computer CoLtd |
| Capcom Co vs. Nintendo Co | Capcom Co vs. Nintendo Co | Capcom Co vs. Sea Limited | Capcom Co vs. Electronic Arts |
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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