Correlation Between Electronic Arts and TOTAL GABON
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and TOTAL GABON 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 TOTAL GABON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and TOTAL GABON, you can compare the effects of market volatilities on Electronic Arts and TOTAL GABON 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 TOTAL GABON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and TOTAL GABON.
Diversification Opportunities for Electronic Arts and TOTAL GABON
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Electronic and TOTAL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON 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 TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of Electronic Arts i.e., Electronic Arts and TOTAL GABON go up and down completely randomly.
Pair Corralation between Electronic Arts and TOTAL GABON
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.52 times more return on investment than TOTAL GABON. However, Electronic Arts is 1.92 times less risky than TOTAL GABON. It trades about 0.15 of its potential returns per unit of risk. TOTAL GABON is currently generating about 0.07 per unit of risk. If you would invest 12,595 in Electronic Arts on September 3, 2024 and sell it today you would earn a total of 2,919 from holding Electronic Arts or generate 23.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Electronic Arts vs. TOTAL GABON
Performance |
| Timeline |
| Electronic Arts |
| TOTAL GABON |
Electronic Arts and TOTAL GABON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and TOTAL GABON
The main advantage of trading using opposite Electronic Arts and TOTAL GABON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, TOTAL GABON 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 TOTAL GABON will offset losses from the drop in TOTAL GABON's long position.| Electronic Arts vs. TOTAL GABON | Electronic Arts vs. Walgreens Boots Alliance | Electronic Arts vs. Peak Resources Limited |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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