Correlation Between Electronic Arts and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and CDN IMPERIAL 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 CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and CDN IMPERIAL BANK, you can compare the effects of market volatilities on Electronic Arts and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and CDN IMPERIAL.
Diversification Opportunities for Electronic Arts and CDN IMPERIAL
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronic and CDN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Electronic Arts i.e., Electronic Arts and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Electronic Arts and CDN IMPERIAL
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the CDN IMPERIAL. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.34 times less risky than CDN IMPERIAL. The stock trades about -0.3 of its potential returns per unit of risk. The CDN IMPERIAL BANK is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,090 in CDN IMPERIAL BANK on October 20, 2024 and sell it today you would earn a total of 14.00 from holding CDN IMPERIAL BANK or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Electronic Arts |
| CDN IMPERIAL BANK |
Electronic Arts and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and CDN IMPERIAL
The main advantage of trading using opposite Electronic Arts and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| Electronic Arts vs. TELECOM ITALRISP ADR10 | Electronic Arts vs. Hemisphere Energy Corp | Electronic Arts vs. Highlight Communications AG | Electronic Arts vs. Zoom Video Communications |
| CDN IMPERIAL vs. SOLSTAD OFFSHORE NK | CDN IMPERIAL vs. UPDATE SOFTWARE | CDN IMPERIAL vs. Electronic Arts | CDN IMPERIAL vs. Nucletron Electronic Aktiengesellschaft |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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