Correlation Between Electronic Arts and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Inspire Medical 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 Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Inspire Medical Systems, you can compare the effects of market volatilities on Electronic Arts and Inspire Medical 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 Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Inspire Medical.
Diversification Opportunities for Electronic Arts and Inspire Medical
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and Inspire is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems 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 Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Electronic Arts i.e., Electronic Arts and Inspire Medical go up and down completely randomly.
Pair Corralation between Electronic Arts and Inspire Medical
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.38 times more return on investment than Inspire Medical. However, Electronic Arts is 2.62 times less risky than Inspire Medical. It trades about 0.04 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about 0.01 per unit of risk. If you would invest 11,595 in Electronic Arts on October 11, 2024 and sell it today you would earn a total of 2,393 from holding Electronic Arts or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.62% |
| Values | Daily Returns |
Electronic Arts vs. Inspire Medical Systems
Performance |
| Timeline |
| Electronic Arts |
| Inspire Medical Systems |
Electronic Arts and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Inspire Medical
The main advantage of trading using opposite Electronic Arts and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.| Electronic Arts vs. Australian Agricultural | Electronic Arts vs. ON SEMICONDUCTOR | Electronic Arts vs. GREENX METALS LTD | Electronic Arts vs. Magnachip Semiconductor |
| Inspire Medical vs. The Hongkong and | Inspire Medical vs. EIDESVIK OFFSHORE NK | Inspire Medical vs. Japan Tobacco | Inspire Medical vs. Dalata Hotel Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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