Correlation Between Electronic Arts and COGNA EDUCACAO
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and COGNA EDUCACAO 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 COGNA EDUCACAO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and COGNA EDUCACAO SPADR, you can compare the effects of market volatilities on Electronic Arts and COGNA EDUCACAO 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 COGNA EDUCACAO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and COGNA EDUCACAO.
Diversification Opportunities for Electronic Arts and COGNA EDUCACAO
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Electronic and COGNA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and COGNA EDUCACAO SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COGNA EDUCACAO SPADR 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 COGNA EDUCACAO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COGNA EDUCACAO SPADR has no effect on the direction of Electronic Arts i.e., Electronic Arts and COGNA EDUCACAO go up and down completely randomly.
Pair Corralation between Electronic Arts and COGNA EDUCACAO
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.11 times more return on investment than COGNA EDUCACAO. However, Electronic Arts is 9.27 times less risky than COGNA EDUCACAO. It trades about 0.1 of its potential returns per unit of risk. COGNA EDUCACAO SPADR is currently generating about 0.01 per unit of risk. If you would invest 12,555 in Electronic Arts on September 12, 2024 and sell it today you would earn a total of 3,311 from holding Electronic Arts or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.64% |
| Values | Daily Returns |
Electronic Arts vs. COGNA EDUCACAO SPADR
Performance |
| Timeline |
| Electronic Arts |
| COGNA EDUCACAO SPADR |
Electronic Arts and COGNA EDUCACAO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and COGNA EDUCACAO
The main advantage of trading using opposite Electronic Arts and COGNA EDUCACAO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, COGNA EDUCACAO 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 COGNA EDUCACAO will offset losses from the drop in COGNA EDUCACAO's long position.| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc |
| COGNA EDUCACAO vs. CAL MAINE FOODS | COGNA EDUCACAO vs. Electronic Arts | COGNA EDUCACAO vs. UET United Electronic | COGNA EDUCACAO vs. Renesas Electronics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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