Correlation Between Nintendo and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Nintendo 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 Nintendo and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nintendo Co and Electronic Arts, you can compare the effects of market volatilities on Nintendo 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 Nintendo with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nintendo and Electronic Arts.
Diversification Opportunities for Nintendo and Electronic Arts
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nintendo and Electronic is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Nintendo 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 Nintendo Co 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 Nintendo i.e., Nintendo and Electronic Arts go up and down completely randomly.
Pair Corralation between Nintendo and Electronic Arts
Assuming the 90 days horizon Nintendo is expected to generate 2.1 times less return on investment than Electronic Arts. In addition to that, Nintendo is 2.49 times more volatile than Electronic Arts. It trades about 0.08 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.43 per unit of volatility. If you would invest 14,545 in Electronic Arts on August 30, 2024 and sell it today you would earn a total of 1,765 from holding Electronic Arts or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nintendo Co vs. Electronic Arts
Performance |
| Timeline |
| Nintendo |
| Electronic Arts |
Nintendo and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nintendo and Electronic Arts
The main advantage of trading using opposite Nintendo and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo 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.| Nintendo vs. Playstudios | Nintendo vs. Doubledown Interactive Co | Nintendo vs. Bragg Gaming Group | Nintendo vs. Golden Matrix Group |
| Electronic Arts vs. Nintendo Co ADR | Electronic Arts vs. Roblox Corp | Electronic Arts vs. NetEase | Electronic Arts vs. Take Two Interactive Software |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |