Correlation Between Electronic Arts and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Bausch Health 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 Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Bausch Health Companies, you can compare the effects of market volatilities on Electronic Arts and Bausch Health 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 Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Bausch Health.
Diversification Opportunities for Electronic Arts and Bausch Health
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Electronic and Bausch is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies 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 Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Electronic Arts i.e., Electronic Arts and Bausch Health go up and down completely randomly.
Pair Corralation between Electronic Arts and Bausch Health
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.35 times more return on investment than Bausch Health. However, Electronic Arts is 2.84 times less risky than Bausch Health. It trades about 0.46 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.03 per unit of risk. If you would invest 12,890 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 2,843 from holding Electronic Arts or generate 22.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Electronic Arts vs. Bausch Health Companies
Performance |
| Timeline |
| Electronic Arts |
| Bausch Health Companies |
Electronic Arts and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Bausch Health
The main advantage of trading using opposite Electronic Arts and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Bausch Health 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 Bausch Health will offset losses from the drop in Bausch Health's long position.| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Superior Plus Corp | Electronic Arts vs. SIVERS SEMICONDUCTORS AB |
| Bausch Health vs. Superior Plus Corp | Bausch Health vs. NMI Holdings | Bausch Health vs. SIVERS SEMICONDUCTORS AB | Bausch Health vs. Talanx AG |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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