Correlation Between Electronic Arts and Apple
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Apple Inc, you can compare the effects of market volatilities on Electronic Arts and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Apple.
Diversification Opportunities for Electronic Arts and Apple
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronic and Apple is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Electronic Arts i.e., Electronic Arts and Apple go up and down completely randomly.
Pair Corralation between Electronic Arts and Apple
Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.52 times less return on investment than Apple. But when comparing it to its historical volatility, Electronic Arts is 1.08 times less risky than Apple. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13,554 in Apple Inc on September 4, 2024 and sell it today you would earn a total of 9,256 from holding Apple Inc or generate 68.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.69% |
| Values | Daily Returns |
Electronic Arts vs. Apple Inc
Performance |
| Timeline |
| Electronic Arts |
| Apple Inc |
Electronic Arts and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Apple
The main advantage of trading using opposite Electronic Arts and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Electronic Arts vs. HEALTHCARE REAL A | Electronic Arts vs. HomeToGo SE | Electronic Arts vs. EPSILON HEALTHCARE LTD | Electronic Arts vs. DiamondRock Hospitality |
| Apple vs. PICKN PAY STORES | Apple vs. T MOBILE INCDL 00001 | Apple vs. BJs Wholesale Club | Apple vs. Entravision Communications |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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