Correlation Between Golden Metal and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Golden Metal 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 Golden Metal and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and Electronic Arts, you can compare the effects of market volatilities on Golden Metal 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 Golden Metal with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Electronic Arts.
Diversification Opportunities for Golden Metal and Electronic Arts
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Golden and Electronic is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Golden Metal 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 Golden Metal Resources 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 Golden Metal i.e., Golden Metal and Electronic Arts go up and down completely randomly.
Pair Corralation between Golden Metal and Electronic Arts
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 5.84 times more return on investment than Electronic Arts. However, Golden Metal is 5.84 times more volatile than Electronic Arts. It trades about 0.16 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.55 per unit of risk. If you would invest 2,600 in Golden Metal Resources on August 30, 2024 and sell it today you would earn a total of 500.00 from holding Golden Metal Resources or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Electronic Arts
Performance |
| Timeline |
| Golden Metal Resources |
| Electronic Arts |
Golden Metal and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Electronic Arts
The main advantage of trading using opposite Golden Metal and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal 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.| Golden Metal vs. Givaudan SA | Golden Metal vs. Antofagasta PLC | Golden Metal vs. Centamin PLC | Golden Metal vs. Atalaya Mining |
| Electronic Arts vs. GreenX Metals | Electronic Arts vs. Molson Coors Beverage | Electronic Arts vs. Greenroc Mining PLC | Electronic Arts vs. Skandinaviska Enskilda Banken |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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