Correlation Between Global X and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Electronic Arts, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Electronic Arts.
Diversification Opportunities for Global X and Electronic Arts
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Electronic is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Global X 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 Global X Funds 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 Global X i.e., Global X and Electronic Arts go up and down completely randomly.
Pair Corralation between Global X and Electronic Arts
Assuming the 90 days trading horizon Global X Funds is expected to generate 1.1 times more return on investment than Electronic Arts. However, Global X is 1.1 times more volatile than Electronic Arts. It trades about 0.29 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.3 per unit of risk. If you would invest 4,090 in Global X Funds on September 10, 2024 and sell it today you would earn a total of 1,110 from holding Global X Funds or generate 27.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Global X Funds vs. Electronic Arts
Performance |
Timeline |
Global X Funds |
Electronic Arts |
Global X and Electronic Arts Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global X and Electronic Arts
The main advantage of trading using opposite Global X and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.Global X vs. Take Two Interactive Software | Global X vs. Fidelity National Information | Global X vs. Bank of America | Global X vs. Credit Acceptance |
Electronic Arts vs. Marvell Technology | Electronic Arts vs. Metalurgica Gerdau SA | Electronic Arts vs. Metalrgica Riosulense SA | Electronic Arts vs. Capital One Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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