Correlation Between Electronic Arts and PGE
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and PGE 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 PGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and PGE Corporation, you can compare the effects of market volatilities on Electronic Arts and PGE 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 PGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and PGE.
Diversification Opportunities for Electronic Arts and PGE
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Electronic and PGE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and PGE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corporation 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 PGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corporation has no effect on the direction of Electronic Arts i.e., Electronic Arts and PGE go up and down completely randomly.
Pair Corralation between Electronic Arts and PGE
Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.18 times more return on investment than PGE. However, Electronic Arts is 1.18 times more volatile than PGE Corporation. It trades about 0.02 of its potential returns per unit of risk. PGE Corporation is currently generating about 0.01 per unit of risk. If you would invest 11,518 in Electronic Arts on December 4, 2024 and sell it today you would earn a total of 944.00 from holding Electronic Arts or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 79.17% |
| Values | Daily Returns |
Electronic Arts vs. PGE Corp.
Performance |
| Timeline |
| Electronic Arts |
| PGE Corporation |
Electronic Arts and PGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and PGE
The main advantage of trading using opposite Electronic Arts and PGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, PGE 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 PGE will offset losses from the drop in PGE's long position.| Electronic Arts vs. AIR CHINA LTD | Electronic Arts vs. CHINA SOUTHN AIR H | Electronic Arts vs. QINGCI GAMES INC | Electronic Arts vs. CONTAGIOUS GAMING INC |
| PGE vs. Hitachi Construction Machinery | PGE vs. Warner Music Group | PGE vs. MOVIE GAMES SA | PGE vs. ePlay Digital |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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