Correlation Between Electronic Arts and PRS Reit
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and PRS Reit 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 PRS Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and PRS Reit PLC, you can compare the effects of market volatilities on Electronic Arts and PRS Reit 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 PRS Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and PRS Reit.
Diversification Opportunities for Electronic Arts and PRS Reit
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and PRS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and PRS Reit PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRS Reit PLC 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 PRS Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRS Reit PLC has no effect on the direction of Electronic Arts i.e., Electronic Arts and PRS Reit go up and down completely randomly.
Pair Corralation between Electronic Arts and PRS Reit
Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the PRS Reit. In addition to that, Electronic Arts is 2.48 times more volatile than PRS Reit PLC. It trades about -0.15 of its total potential returns per unit of risk. PRS Reit PLC is currently generating about 0.15 per unit of volatility. If you would invest 10,340 in PRS Reit PLC on November 21, 2024 and sell it today you would earn a total of 1,000.00 from holding PRS Reit PLC or generate 9.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Electronic Arts vs. PRS Reit PLC
Performance |
Timeline |
Electronic Arts |
PRS Reit PLC |
Electronic Arts and PRS Reit Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Electronic Arts and PRS Reit
The main advantage of trading using opposite Electronic Arts and PRS Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, PRS Reit 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 PRS Reit will offset losses from the drop in PRS Reit's long position.Electronic Arts vs. Gamma Communications PLC | ||
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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