Correlation Between Electronic Arts and Global X

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

By analyzing existing cross correlation between Electronic Arts and Global X Funds, you can compare the effects of market volatilities on Electronic Arts and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Global X.

Diversification Opportunities for Electronic Arts and Global X

0.91

Correlation Coefficient

Electronic Arts  Global X

Almost no diversification

The 3 months correlation between Electronic and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Electronic Arts i.e., Electronic Arts and Global X go up and down completely randomly.

Pair Corralation between Electronic Arts and Global X

Assuming the 90 days trading horizon Electronic Arts is expected to generate 1.11 times less return on investment than Global X. But when comparing it to its historical volatility, Electronic Arts is 1.1 times less risky than Global X. It trades about 0.3 of its potential returns per unit of risk. Global X Funds is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  4,034  in Global X Funds on September 9, 2024 and sell it today you would earn a total of  1,166  from holding Global X Funds or generate 28.9% return on investment over 90 days.

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

Electronic Arts  vs.  Global X Funds

Electronic Arts

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Electronic Arts sustained solid returns over the last few months and may actually be approaching a breakup point.

Global X Funds

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electronic Arts and Global X

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

The idea behind Electronic Arts and Global X Funds 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.