Correlation Between WILLIS LEASE and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both WILLIS LEASE 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 WILLIS LEASE and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WILLIS LEASE FIN and Electronic Arts, you can compare the effects of market volatilities on WILLIS LEASE 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 WILLIS LEASE with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of WILLIS LEASE and Electronic Arts.
Diversification Opportunities for WILLIS LEASE and Electronic Arts
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WILLIS and Electronic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and WILLIS LEASE 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 WILLIS LEASE FIN 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 WILLIS LEASE i.e., WILLIS LEASE and Electronic Arts go up and down completely randomly.
Pair Corralation between WILLIS LEASE and Electronic Arts
Assuming the 90 days horizon WILLIS LEASE FIN is expected to generate 5.16 times more return on investment than Electronic Arts. However, WILLIS LEASE is 5.16 times more volatile than Electronic Arts. It trades about 0.13 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.53 per unit of risk. If you would invest 16,680 in WILLIS LEASE FIN on August 30, 2024 and sell it today you would earn a total of 2,620 from holding WILLIS LEASE FIN or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WILLIS LEASE FIN vs. Electronic Arts
Performance |
| Timeline |
| WILLIS LEASE FIN |
| Electronic Arts |
WILLIS LEASE and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WILLIS LEASE and Electronic Arts
The main advantage of trading using opposite WILLIS LEASE and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WILLIS LEASE 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.| WILLIS LEASE vs. Superior Plus Corp | WILLIS LEASE vs. SIVERS SEMICONDUCTORS AB | WILLIS LEASE vs. Talanx AG | WILLIS LEASE vs. 2G ENERGY |
| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Superior Plus Corp | Electronic Arts vs. SIVERS SEMICONDUCTORS AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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