Correlation Between Electronic Arts and HYATT HOTELS
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and HYATT HOTELS 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 HYATT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and HYATT HOTELS A, you can compare the effects of market volatilities on Electronic Arts and HYATT HOTELS 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 HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and HYATT HOTELS.
Diversification Opportunities for Electronic Arts and HYATT HOTELS
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronic and HYATT is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A 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 HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Electronic Arts i.e., Electronic Arts and HYATT HOTELS go up and down completely randomly.
Pair Corralation between Electronic Arts and HYATT HOTELS
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the HYATT HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.25 times less risky than HYATT HOTELS. The stock trades about -0.27 of its potential returns per unit of risk. The HYATT HOTELS A is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,370 in HYATT HOTELS A on October 17, 2024 and sell it today you would earn a total of 530.00 from holding HYATT HOTELS A or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. HYATT HOTELS A
Performance |
| Timeline |
| Electronic Arts |
| HYATT HOTELS A |
Electronic Arts and HYATT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and HYATT HOTELS
The main advantage of trading using opposite Electronic Arts and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, HYATT HOTELS 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 HYATT HOTELS will offset losses from the drop in HYATT HOTELS's long position.| Electronic Arts vs. PT Steel Pipe | Electronic Arts vs. DONGJIANG ENVIRONMENTAL H | Electronic Arts vs. Xiwang Special Steel | Electronic Arts vs. SENECA FOODS A |
| HYATT HOTELS vs. AOI Electronics Co | HYATT HOTELS vs. STORE ELECTRONIC | HYATT HOTELS vs. Electronic Arts | HYATT HOTELS vs. STMICROELECTRONICS |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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