Correlation Between Electronic Arts and MUTUIONLINE
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and MUTUIONLINE 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 MUTUIONLINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and MUTUIONLINE, you can compare the effects of market volatilities on Electronic Arts and MUTUIONLINE 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 MUTUIONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and MUTUIONLINE.
Diversification Opportunities for Electronic Arts and MUTUIONLINE
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Electronic and MUTUIONLINE is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and MUTUIONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUTUIONLINE 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 MUTUIONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUTUIONLINE has no effect on the direction of Electronic Arts i.e., Electronic Arts and MUTUIONLINE go up and down completely randomly.
Pair Corralation between Electronic Arts and MUTUIONLINE
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.51 times more return on investment than MUTUIONLINE. However, Electronic Arts is 1.96 times less risky than MUTUIONLINE. It trades about 0.69 of its potential returns per unit of risk. MUTUIONLINE is currently generating about 0.29 per unit of risk. If you would invest 13,326 in Electronic Arts on August 29, 2024 and sell it today you would earn a total of 2,444 from holding Electronic Arts or generate 18.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. MUTUIONLINE
Performance |
| Timeline |
| Electronic Arts |
| MUTUIONLINE |
Electronic Arts and MUTUIONLINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and MUTUIONLINE
The main advantage of trading using opposite Electronic Arts and MUTUIONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, MUTUIONLINE 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 MUTUIONLINE will offset losses from the drop in MUTUIONLINE's long position.| Electronic Arts vs. MI Homes | Electronic Arts vs. Geratherm Medical AG | Electronic Arts vs. ONWARD MEDICAL BV | Electronic Arts vs. Advanced Medical Solutions |
| MUTUIONLINE vs. Apple Inc | MUTUIONLINE vs. Apple Inc | MUTUIONLINE vs. Microsoft | MUTUIONLINE vs. Microsoft |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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