Correlation Between Electronic Arts and Kaufman Et

Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Kaufman Et 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 Electronic Arts and Kaufman Et into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electronic Arts and Kaufman Et Broad, you can compare the effects of market volatilities on Electronic Arts and Kaufman Et 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 Electronic Arts with a short position of Kaufman Et. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Kaufman Et.

Diversification Opportunities for Electronic Arts and Kaufman Et

-0.2

Correlation Coefficient

Electronic Arts  Kaufman Et

Good diversification

The 3 months correlation between Electronic and Kaufman is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Kaufman Et Broad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaufman Et Broad and Electronic Arts 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 Electronic Arts are associated (or correlated) with Kaufman Et. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaufman Et Broad has no effect on the direction of Electronic Arts i.e., Electronic Arts and Kaufman Et go up and down completely randomly.

Pair Corralation between Electronic Arts and Kaufman Et

Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.7 times more return on investment than Kaufman Et. However, Electronic Arts is 1.43 times less risky than Kaufman Et. It trades about -0.02 of its potential returns per unit of risk. Kaufman Et Broad is currently generating about -0.11 per unit of risk. If you would invest  14,492  in Electronic Arts on October 24, 2024 and sell it today you would lose (188.00) from holding Electronic Arts or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Electronic Arts  vs.  Kaufman Et Broad

Electronic Arts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Arts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Electronic Arts is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kaufman Et Broad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaufman Et Broad has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Electronic Arts and Kaufman Et

The main advantage of trading using opposite Electronic Arts and Kaufman Et positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Kaufman Et 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 Kaufman Et will offset losses from the drop in Kaufman Et's long position.

The idea behind Electronic Arts and Kaufman Et Broad pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.