Correlation Between Electronic Arts and LIFE SCIREIT
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and LIFE SCIREIT 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 LIFE SCIREIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and LIFE SCIREIT PLC, you can compare the effects of market volatilities on Electronic Arts and LIFE SCIREIT 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 LIFE SCIREIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and LIFE SCIREIT.
Diversification Opportunities for Electronic Arts and LIFE SCIREIT
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Electronic and LIFE is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and LIFE SCIREIT PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE SCIREIT PLC 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 LIFE SCIREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE SCIREIT PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and LIFE SCIREIT go up and down completely randomly.
Pair Corralation between Electronic Arts and LIFE SCIREIT
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.29 times more return on investment than LIFE SCIREIT. However, Electronic Arts is 3.48 times less risky than LIFE SCIREIT. It trades about 0.19 of its potential returns per unit of risk. LIFE SCIREIT PLC is currently generating about -0.2 per unit of risk. If you would invest 15,164 in Electronic Arts on September 13, 2024 and sell it today you would earn a total of 550.00 from holding Electronic Arts or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Electronic Arts vs. LIFE SCIREIT PLC
Performance |
| Timeline |
| Electronic Arts |
| LIFE SCIREIT PLC |
Electronic Arts and LIFE SCIREIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and LIFE SCIREIT
The main advantage of trading using opposite Electronic Arts and LIFE SCIREIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, LIFE SCIREIT 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 LIFE SCIREIT will offset losses from the drop in LIFE SCIREIT's long position.| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc |
| LIFE SCIREIT vs. Soken Chemical Engineering | LIFE SCIREIT vs. China Communications Services | LIFE SCIREIT vs. X FAB Silicon Foundries | LIFE SCIREIT vs. CITIC Telecom International |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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