Correlation Between Ipsen SA and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Ipsen SA 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 Ipsen SA and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ipsen SA and Electronic Arts, you can compare the effects of market volatilities on Ipsen SA 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 Ipsen SA with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ipsen SA and Electronic Arts.
Diversification Opportunities for Ipsen SA and Electronic Arts
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ipsen and Electronic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Ipsen SA 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 Ipsen SA 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 Ipsen SA i.e., Ipsen SA and Electronic Arts go up and down completely randomly.
Pair Corralation between Ipsen SA and Electronic Arts
Assuming the 90 days horizon Ipsen SA is expected to under-perform the Electronic Arts. In addition to that, Ipsen SA is 1.41 times more volatile than Electronic Arts. It trades about -0.14 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.68 per unit of volatility. If you would invest 13,462 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 2,308 from holding Electronic Arts or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ipsen SA vs. Electronic Arts
Performance |
| Timeline |
| Ipsen SA |
| Electronic Arts |
Ipsen SA and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ipsen SA and Electronic Arts
The main advantage of trading using opposite Ipsen SA and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ipsen SA 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.| Ipsen SA vs. Superior Plus Corp | Ipsen SA vs. NMI Holdings | Ipsen SA vs. SIVERS SEMICONDUCTORS AB | Ipsen SA vs. Talanx AG |
| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Superior Plus Corp | Electronic Arts vs. SIVERS SEMICONDUCTORS AB |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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