Correlation Between Electronic Arts and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Dow Jones Industrial, you can compare the effects of market volatilities on Electronic Arts and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Dow Jones.
Diversification Opportunities for Electronic Arts and Dow Jones
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electronic and Dow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Electronic Arts i.e., Electronic Arts and Dow Jones go up and down completely randomly.
Pair Corralation between Electronic Arts and Dow Jones
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 3.09 times more return on investment than Dow Jones. However, Electronic Arts is 3.09 times more volatile than Dow Jones Industrial. It trades about 0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.04 per unit of risk. If you would invest 14,633 in Electronic Arts on December 29, 2024 and sell it today you would lose (208.00) from holding Electronic Arts or give up 1.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Electronic Arts vs. Dow Jones Industrial
Performance |
Timeline |
Electronic Arts and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Electronic Arts
Pair trading matchups for Electronic Arts
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Electronic Arts and Dow Jones
The main advantage of trading using opposite Electronic Arts and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Electronic Arts vs. Nintendo Co ADR | Electronic Arts vs. Roblox Corp | Electronic Arts vs. NetEase | Electronic Arts vs. Take Two Interactive Software |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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