Correlation Between Kronos Worldwide and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both Kronos Worldwide 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 Kronos Worldwide and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kronos Worldwide and ELECTRONIC ARTS, you can compare the effects of market volatilities on Kronos Worldwide 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 Kronos Worldwide with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Worldwide and ELECTRONIC ARTS.
Diversification Opportunities for Kronos Worldwide and ELECTRONIC ARTS
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kronos and ELECTRONIC is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide i.e., Kronos Worldwide and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between Kronos Worldwide and ELECTRONIC ARTS
Assuming the 90 days horizon Kronos Worldwide is expected to generate 1.98 times less return on investment than ELECTRONIC ARTS. In addition to that, Kronos Worldwide is 1.73 times more volatile than ELECTRONIC ARTS. It trades about 0.04 of its total potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.15 per unit of volatility. If you would invest 13,687 in ELECTRONIC ARTS on September 2, 2024 and sell it today you would earn a total of 1,733 from holding ELECTRONIC ARTS or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kronos Worldwide vs. ELECTRONIC ARTS
Performance |
| Timeline |
| Kronos Worldwide |
| ELECTRONIC ARTS |
Kronos Worldwide and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kronos Worldwide and ELECTRONIC ARTS
The main advantage of trading using opposite Kronos Worldwide and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kronos Worldwide 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's long position.| Kronos Worldwide vs. Pembina Pipeline Corp | Kronos Worldwide vs. Perseus Mining Limited | Kronos Worldwide vs. Western Copper and | Kronos Worldwide vs. Goodyear Tire Rubber |
| ELECTRONIC ARTS vs. PTT Global Chemical | ELECTRONIC ARTS vs. Eastman Chemical | ELECTRONIC ARTS vs. NISSAN CHEMICAL IND | ELECTRONIC ARTS vs. Silicon Motion Technology |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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