Correlation Between Electronic Arts and Capri Holdings
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Capri Holdings 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 Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Capri Holdings Limited, you can compare the effects of market volatilities on Electronic Arts and Capri Holdings 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 Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Capri Holdings.
Diversification Opportunities for Electronic Arts and Capri Holdings
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electronic and Capri is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Capri Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings 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 Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Electronic Arts i.e., Electronic Arts and Capri Holdings go up and down completely randomly.
Pair Corralation between Electronic Arts and Capri Holdings
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.34 times more return on investment than Capri Holdings. However, Electronic Arts is 2.92 times less risky than Capri Holdings. It trades about 0.06 of its potential returns per unit of risk. Capri Holdings Limited is currently generating about -0.02 per unit of risk. If you would invest 11,228 in Electronic Arts on September 16, 2024 and sell it today you would earn a total of 4,350 from holding Electronic Arts or generate 38.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.51% |
| Values | Daily Returns |
Electronic Arts vs. Capri Holdings Limited
Performance |
| Timeline |
| Electronic Arts |
| Capri Holdings |
Electronic Arts and Capri Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Capri Holdings
The main advantage of trading using opposite Electronic Arts and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Capri Holdings 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc |
| Capri Holdings vs. Electronic Arts | Capri Holdings vs. Webster Financial | Capri Holdings vs. Samsung Electronics Co | Capri Holdings vs. SWISS WATER DECAFFCOFFEE |
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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