Correlation Between Electronic Arts and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and INVITATION HOMES 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 INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and INVITATION HOMES DL, you can compare the effects of market volatilities on Electronic Arts and INVITATION HOMES 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 INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and INVITATION HOMES.
Diversification Opportunities for Electronic Arts and INVITATION HOMES
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Electronic and INVITATION is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Electronic Arts i.e., Electronic Arts and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Electronic Arts and INVITATION HOMES
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.88 times more return on investment than INVITATION HOMES. However, Electronic Arts is 1.14 times less risky than INVITATION HOMES. It trades about 0.09 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.09 per unit of risk. If you would invest 15,349 in Electronic Arts on September 16, 2024 and sell it today you would earn a total of 229.00 from holding Electronic Arts or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Electronic Arts vs. INVITATION HOMES DL
Performance |
| Timeline |
| Electronic Arts |
| INVITATION HOMES |
Electronic Arts and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and INVITATION HOMES
The main advantage of trading using opposite Electronic Arts and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc |
| INVITATION HOMES vs. Computer And Technologies | INVITATION HOMES vs. Gamma Communications plc | INVITATION HOMES vs. UET United Electronic | INVITATION HOMES 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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