Correlation Between PREMIER FOODS and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS 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 PREMIER FOODS and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Electronic Arts, you can compare the effects of market volatilities on PREMIER FOODS 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 PREMIER FOODS with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Electronic Arts.
Diversification Opportunities for PREMIER FOODS and Electronic Arts
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PREMIER and Electronic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and PREMIER FOODS 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 PREMIER FOODS 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 PREMIER FOODS i.e., PREMIER FOODS and Electronic Arts go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Electronic Arts
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 2.02 times less return on investment than Electronic Arts. In addition to that, PREMIER FOODS is 1.36 times more volatile than Electronic Arts. It trades about 0.16 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.44 per unit of volatility. If you would invest 13,909 in Electronic Arts on September 1, 2024 and sell it today you would earn a total of 1,605 from holding Electronic Arts or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Electronic Arts
Performance |
| Timeline |
| PREMIER FOODS |
| Electronic Arts |
PREMIER FOODS and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Electronic Arts
The main advantage of trading using opposite PREMIER FOODS and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS 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.| PREMIER FOODS vs. SIVERS SEMICONDUCTORS AB | PREMIER FOODS vs. Darden Restaurants | PREMIER FOODS vs. Reliance Steel Aluminum | PREMIER FOODS vs. Q2M Managementberatung AG |
| Electronic Arts vs. PREMIER FOODS | Electronic Arts vs. MOLSON RS BEVERAGE | Electronic Arts vs. TYSON FOODS A | Electronic Arts vs. JJ SNACK FOODS |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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