Correlation Between Catalyst Media and Electronic Arts

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

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

Diversification Opportunities for Catalyst Media and Electronic Arts

0.27

Correlation Coefficient

Catalyst Media  Electronic Arts

Modest diversification

The 3 months correlation between Catalyst and Electronic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Catalyst Media 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 Catalyst Media Group 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 Catalyst Media i.e., Catalyst Media and Electronic Arts go up and down completely randomly.

Pair Corralation between Catalyst Media and Electronic Arts

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the Electronic Arts. In addition to that, Catalyst Media is 1.79 times more volatile than Electronic Arts. It trades about -0.09 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.03 per unit of volatility. If you would invest  14,291  in Electronic Arts on October 5, 2024 and sell it today you would earn a total of  253.00  from holding Electronic Arts or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Catalyst Media Group  vs.  Electronic Arts

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Electronic Arts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Catalyst Media and Electronic Arts

The main advantage of trading using opposite Catalyst Media and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media 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.

The idea behind Catalyst Media Group and Electronic Arts 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.