Correlation Between N2TN34 and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both N2TN34 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 N2TN34 and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between N2TN34 and Electronic Arts, you can compare the effects of market volatilities on N2TN34 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 N2TN34 with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of N2TN34 and Electronic Arts.
Diversification Opportunities for N2TN34 and Electronic Arts
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between N2TN34 and Electronic is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding N2TN34 and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and N2TN34 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 N2TN34 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 N2TN34 i.e., N2TN34 and Electronic Arts go up and down completely randomly.
Pair Corralation between N2TN34 and Electronic Arts
Assuming the 90 days trading horizon N2TN34 is expected to under-perform the Electronic Arts. In addition to that, N2TN34 is 1.61 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 -0.16 per unit of volatility. If you would invest 47,643 in Electronic Arts on September 25, 2024 and sell it today you would lose (2,193) from holding Electronic Arts or give up 4.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 80.95% |
| Values | Daily Returns |
N2TN34 vs. Electronic Arts
Performance |
| Timeline |
| N2TN34 |
| Electronic Arts |
N2TN34 and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with N2TN34 and Electronic Arts
The main advantage of trading using opposite N2TN34 and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if N2TN34 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.| N2TN34 vs. Electronic Arts | N2TN34 vs. NXP Semiconductors NV | N2TN34 vs. Iron Mountain Incorporated | N2TN34 vs. Tres Tentos Agroindustrial |
| Electronic Arts vs. NetEase | Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Bilibili |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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