Correlation Between United States and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Electronic Arts, you can compare the effects of market volatilities on United States 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 United States with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Electronic Arts.
Diversification Opportunities for United States and Electronic Arts
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Electronic is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and United States 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 United States Steel 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 United States i.e., United States and Electronic Arts go up and down completely randomly.
Pair Corralation between United States and Electronic Arts
Assuming the 90 days trading horizon United States Steel is expected to under-perform the Electronic Arts. In addition to that, United States is 2.39 times more volatile than Electronic Arts. It trades about -0.11 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.2 per unit of volatility. If you would invest 41,010 in Electronic Arts on September 27, 2024 and sell it today you would earn a total of 4,440 from holding Electronic Arts or generate 10.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Electronic Arts
Performance |
| Timeline |
| United States Steel |
| Electronic Arts |
United States and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Electronic Arts
The main advantage of trading using opposite United States and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Gerdau SA | United States vs. Metalurgica Gerdau SA | United States vs. Bradespar SA | United States vs. Companhia Paranaense de |
| Electronic Arts vs. Hospital Mater Dei | Electronic Arts vs. Teladoc Health | Electronic Arts vs. United States Steel | Electronic Arts vs. Fidelity National Information |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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