Correlation Between Electronic Arts and TRAINLINE PLC
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and TRAINLINE PLC 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 TRAINLINE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and TRAINLINE PLC LS, you can compare the effects of market volatilities on Electronic Arts and TRAINLINE PLC 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 TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and TRAINLINE PLC.
Diversification Opportunities for Electronic Arts and TRAINLINE PLC
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electronic and TRAINLINE is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS 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 TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of Electronic Arts i.e., Electronic Arts and TRAINLINE PLC go up and down completely randomly.
Pair Corralation between Electronic Arts and TRAINLINE PLC
Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.22 times less return on investment than TRAINLINE PLC. But when comparing it to its historical volatility, Electronic Arts is 1.71 times less risky than TRAINLINE PLC. It trades about 0.14 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 490.00 in TRAINLINE PLC LS on September 13, 2024 and sell it today you would earn a total of 15.00 from holding TRAINLINE PLC LS or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Electronic Arts vs. TRAINLINE PLC LS
Performance |
| Timeline |
| Electronic Arts |
| TRAINLINE PLC LS |
Electronic Arts and TRAINLINE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and TRAINLINE PLC
The main advantage of trading using opposite Electronic Arts and TRAINLINE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, TRAINLINE PLC 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 TRAINLINE PLC will offset losses from the drop in TRAINLINE PLC's long position.| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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