Correlation Between G2D Investments and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both G2D Investments 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 G2D Investments and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G2D Investments and Electronic Arts, you can compare the effects of market volatilities on G2D Investments 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 G2D Investments with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of G2D Investments and Electronic Arts.
Diversification Opportunities for G2D Investments and Electronic Arts
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between G2D and Electronic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding G2D Investments and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and G2D Investments 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 G2D Investments 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 G2D Investments i.e., G2D Investments and Electronic Arts go up and down completely randomly.
Pair Corralation between G2D Investments and Electronic Arts
Assuming the 90 days trading horizon G2D Investments is expected to generate 1.72 times less return on investment than Electronic Arts. In addition to that, G2D Investments is 2.41 times more volatile than Electronic Arts. It trades about 0.03 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.12 per unit of volatility. If you would invest 33,688 in Electronic Arts on August 26, 2024 and sell it today you would earn a total of 14,856 from holding Electronic Arts or generate 44.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G2D Investments vs. Electronic Arts
Performance |
| Timeline |
| G2D Investments |
| Electronic Arts |
G2D Investments and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G2D Investments and Electronic Arts
The main advantage of trading using opposite G2D Investments and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G2D Investments 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.| G2D Investments vs. Fras le SA | G2D Investments vs. Clave Indices De | G2D Investments vs. BTG Pactual Logstica | G2D Investments vs. Telefonaktiebolaget LM Ericsson |
| Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Fras le SA | Electronic Arts vs. Clave Indices De | Electronic Arts vs. BTG Pactual Logstica |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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