Correlation Between Electronic Arts and G8 EDUCATION

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and G8 EDUCATION 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 G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and G8 EDUCATION, you can compare the effects of market volatilities on Electronic Arts and G8 EDUCATION 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 G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and G8 EDUCATION.

Diversification Opportunities for Electronic Arts and G8 EDUCATION

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Electronic and 3EAG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION 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 G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of Electronic Arts i.e., Electronic Arts and G8 EDUCATION go up and down completely randomly.

Pair Corralation between Electronic Arts and G8 EDUCATION

Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.08 times less return on investment than G8 EDUCATION. But when comparing it to its historical volatility, Electronic Arts is 1.42 times less risky than G8 EDUCATION. It trades about 0.05 of its potential returns per unit of risk. G8 EDUCATION is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  62.00  in G8 EDUCATION on September 20, 2024 and sell it today you would earn a total of  19.00  from holding G8 EDUCATION or generate 30.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy90.69%
ValuesDaily Returns

Electronic Arts  vs.  G8 EDUCATION

 Performance 
       Timeline  
Electronic Arts 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Electronic Arts unveiled solid returns over the last few months and may actually be approaching a breakup point.
G8 EDUCATION 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in G8 EDUCATION are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, G8 EDUCATION is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Electronic Arts and G8 EDUCATION Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Electronic Arts and G8 EDUCATION

The main advantage of trading using opposite Electronic Arts and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION's long position.
The idea behind Electronic Arts and G8 EDUCATION pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets