Correlation Between TFS FINANCIAL and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both TFS FINANCIAL 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 TFS FINANCIAL and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFS FINANCIAL and ELECTRONIC ARTS, you can compare the effects of market volatilities on TFS FINANCIAL 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 TFS FINANCIAL with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and ELECTRONIC ARTS.
Diversification Opportunities for TFS FINANCIAL and ELECTRONIC ARTS
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TFS and ELECTRONIC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL i.e., TFS FINANCIAL and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between TFS FINANCIAL and ELECTRONIC ARTS
Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 1.42 times less return on investment than ELECTRONIC ARTS. In addition to that, TFS FINANCIAL is 1.3 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 0.15 per unit of volatility. If you would invest 12,124 in ELECTRONIC ARTS on September 2, 2024 and sell it today you would earn a total of 3,296 from holding ELECTRONIC ARTS or generate 27.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFS FINANCIAL vs. ELECTRONIC ARTS
Performance |
| Timeline |
| TFS FINANCIAL |
| ELECTRONIC ARTS |
TFS FINANCIAL and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFS FINANCIAL and ELECTRONIC ARTS
The main advantage of trading using opposite TFS FINANCIAL and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL 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.| TFS FINANCIAL vs. SIVERS SEMICONDUCTORS AB | TFS FINANCIAL vs. Darden Restaurants | TFS FINANCIAL vs. Reliance Steel Aluminum | TFS FINANCIAL vs. Q2M Managementberatung AG |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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