Correlation Between Fair Oaks and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Fair Oaks and Electronic Arts 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 Fair Oaks and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and Electronic Arts, you can compare the effects of market volatilities on Fair Oaks and Electronic Arts 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 Fair Oaks with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Electronic Arts.
Diversification Opportunities for Fair Oaks and Electronic Arts
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fair and Electronic is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Fair Oaks i.e., Fair Oaks and Electronic Arts go up and down completely randomly.
Pair Corralation between Fair Oaks and Electronic Arts
Assuming the 90 days trading horizon Fair Oaks is expected to generate 2.96 times less return on investment than Electronic Arts. But when comparing it to its historical volatility, Fair Oaks Income is 1.41 times less risky than Electronic Arts. It trades about 0.12 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 11,796 in Electronic Arts on November 28, 2024 and sell it today you would earn a total of 1,402 from holding Electronic Arts or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fair Oaks Income vs. Electronic Arts
Performance |
| Timeline |
| Fair Oaks Income |
| Electronic Arts |
Fair Oaks and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Electronic Arts
The main advantage of trading using opposite Fair Oaks and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| Fair Oaks vs. Applied Materials | Fair Oaks vs. Tatton Asset Management | Fair Oaks vs. Molson Coors Beverage | Fair Oaks vs. Gamma Communications PLC |
| Electronic Arts vs. Evolution Gaming Group | Electronic Arts vs. China Pacific Insurance | Electronic Arts vs. UNIQA Insurance Group | Electronic Arts vs. Ecclesiastical Insurance Office |
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 Stocks Directory module to find actively traded stocks across global markets.
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