Correlation Between Electronic Arts and EBIQUITY
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and EBIQUITY 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 EBIQUITY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and EBIQUITY, you can compare the effects of market volatilities on Electronic Arts and EBIQUITY 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 EBIQUITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and EBIQUITY.
Diversification Opportunities for Electronic Arts and EBIQUITY
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and EBIQUITY is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and EBIQUITY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBIQUITY 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 EBIQUITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBIQUITY has no effect on the direction of Electronic Arts i.e., Electronic Arts and EBIQUITY go up and down completely randomly.
Pair Corralation between Electronic Arts and EBIQUITY
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.57 times more return on investment than EBIQUITY. However, Electronic Arts is 1.75 times less risky than EBIQUITY. It trades about 0.04 of its potential returns per unit of risk. EBIQUITY is currently generating about -0.04 per unit of risk. If you would invest 12,622 in Electronic Arts on August 27, 2024 and sell it today you would earn a total of 3,254 from holding Electronic Arts or generate 25.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.69% |
| Values | Daily Returns |
Electronic Arts vs. EBIQUITY
Performance |
| Timeline |
| Electronic Arts |
| EBIQUITY |
Electronic Arts and EBIQUITY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and EBIQUITY
The main advantage of trading using opposite Electronic Arts and EBIQUITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, EBIQUITY 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 EBIQUITY will offset losses from the drop in EBIQUITY's long position.| Electronic Arts vs. Grand Canyon Education | Electronic Arts vs. Microchip Technology Incorporated | Electronic Arts vs. Check Point Software | Electronic Arts vs. EMBARK EDUCATION LTD |
| EBIQUITY vs. REGAL HOTEL INTL | EBIQUITY vs. KIMBALL ELECTRONICS | EBIQUITY vs. Electronic Arts | EBIQUITY vs. NH HOTEL GROUP |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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