Correlation Between GP Investments and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both GP 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 GP 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 GP Investments and Electronic Arts, you can compare the effects of market volatilities on GP 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 GP Investments with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Electronic Arts.
Diversification Opportunities for GP Investments and Electronic Arts
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GPIV33 and Electronic is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and GP 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 GP 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 GP Investments i.e., GP Investments and Electronic Arts go up and down completely randomly.
Pair Corralation between GP Investments and Electronic Arts
Assuming the 90 days trading horizon GP Investments is expected to generate 2.27 times less return on investment than Electronic Arts. In addition to that, GP Investments is 3.01 times more volatile than Electronic Arts. It trades about 0.13 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.88 per unit of volatility. If you would invest 41,010 in Electronic Arts on August 28, 2024 and sell it today you would earn a total of 7,497 from holding Electronic Arts or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
GP Investments vs. Electronic Arts
Performance |
| Timeline |
| GP Investments |
| Electronic Arts |
GP Investments and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Electronic Arts
The main advantage of trading using opposite GP Investments and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP 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.| GP Investments vs. Fras le SA | GP Investments vs. Clave Indices De | GP Investments vs. BTG Pactual Logstica | GP Investments vs. Telefonaktiebolaget LM Ericsson |
| Electronic Arts vs. American Airlines Group | Electronic Arts vs. G2D Investments | Electronic Arts vs. Bread Financial Holdings | Electronic Arts vs. United Airlines Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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