Correlation Between Bio Techne and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Bio Techne 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 Bio Techne and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Techne and Electronic Arts, you can compare the effects of market volatilities on Bio Techne 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 Bio Techne with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Techne and Electronic Arts.
Diversification Opportunities for Bio Techne and Electronic Arts
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bio and Electronic is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Bio Techne 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 Bio Techne 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 Bio Techne i.e., Bio Techne and Electronic Arts go up and down completely randomly.
Pair Corralation between Bio Techne and Electronic Arts
Assuming the 90 days trading horizon Bio Techne is expected to generate 5.56 times more return on investment than Electronic Arts. However, Bio Techne is 5.56 times more volatile than Electronic Arts. It trades about 0.04 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.04 per unit of risk. If you would invest 1,389 in Bio Techne on November 27, 2024 and sell it today you would lose (119.00) from holding Bio Techne or give up 8.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.19% |
| Values | Daily Returns |
Bio Techne vs. Electronic Arts
Performance |
| Timeline |
| Bio Techne |
| Electronic Arts |
Bio Techne and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Techne and Electronic Arts
The main advantage of trading using opposite Bio Techne and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Techne 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.| Bio Techne vs. Beyond Meat | Bio Techne vs. United States Steel | Bio Techne vs. ON Semiconductor | Bio Techne vs. Check Point Software |
| Electronic Arts vs. STMicroelectronics NV | Electronic Arts vs. Extra Space Storage | Electronic Arts vs. Unifique Telecomunicaes SA | Electronic Arts vs. Charter Communications |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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