Correlation Between Electronic Arts and Waste Management
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Waste Management, you can compare the effects of market volatilities on Electronic Arts and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Waste Management.
Diversification Opportunities for Electronic Arts and Waste Management
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electronic and Waste is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Electronic Arts i.e., Electronic Arts and Waste Management go up and down completely randomly.
Pair Corralation between Electronic Arts and Waste Management
Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.23 times less return on investment than Waste Management. In addition to that, Electronic Arts is 1.22 times more volatile than Waste Management. It trades about 0.04 of its total potential returns per unit of risk. Waste Management is currently generating about 0.06 per unit of volatility. If you would invest 15,288 in Waste Management on August 27, 2024 and sell it today you would earn a total of 6,182 from holding Waste Management or generate 40.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 90.69% |
| Values | Daily Returns |
Electronic Arts vs. Waste Management
Performance |
| Timeline |
| Electronic Arts |
| Waste Management |
Electronic Arts and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and Waste Management
The main advantage of trading using opposite Electronic Arts and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Microsoft |
| Waste Management vs. APPLIED MATERIALS | Waste Management vs. Vulcan Materials | Waste Management vs. Sumitomo Rubber Industries | Waste Management vs. VULCAN MATERIALS |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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