Correlation Between Electronic Arts and Take-Two Interactive
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Take-Two Interactive 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 Take-Two Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Take Two Interactive Software, you can compare the effects of market volatilities on Electronic Arts and Take-Two Interactive 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 Take-Two Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Take-Two Interactive.
Diversification Opportunities for Electronic Arts and Take-Two Interactive
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electronic and Take-Two is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take-Two Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Electronic Arts i.e., Electronic Arts and Take-Two Interactive go up and down completely randomly.
Pair Corralation between Electronic Arts and Take-Two Interactive
Assuming the 90 days horizon Electronic Arts is expected to generate 1.88 times less return on investment than Take-Two Interactive. But when comparing it to its historical volatility, Electronic Arts is 1.22 times less risky than Take-Two Interactive. It trades about 0.18 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 13,464 in Take Two Interactive Software on September 22, 2024 and sell it today you would earn a total of 3,968 from holding Take Two Interactive Software or generate 29.47% 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. Take Two Interactive Software
Performance |
| Timeline |
| Electronic Arts |
| Take Two Interactive |
Electronic Arts and Take-Two Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Take-Two Interactive
The main advantage of trading using opposite Electronic Arts and Take-Two Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Take-Two Interactive 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 Take-Two Interactive will offset losses from the drop in Take-Two Interactive's long position.| Electronic Arts vs. Nintendo Co | Electronic Arts vs. Nintendo Co | Electronic Arts vs. Sea Limited | Electronic Arts vs. NEXON Co |
| Take-Two Interactive vs. Nintendo Co | Take-Two Interactive vs. Nintendo Co | Take-Two Interactive vs. Sea Limited | Take-Two Interactive 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |