Correlation Between Electronic Arts and Nordon Indstrias
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Nordon Indstrias 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 Nordon Indstrias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Nordon Indstrias Metalrgicas, you can compare the effects of market volatilities on Electronic Arts and Nordon Indstrias 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 Nordon Indstrias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Nordon Indstrias.
Diversification Opportunities for Electronic Arts and Nordon Indstrias
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electronic and Nordon is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Nordon Indstrias Metalrgicas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordon Indstrias Met 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 Nordon Indstrias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordon Indstrias Met has no effect on the direction of Electronic Arts i.e., Electronic Arts and Nordon Indstrias go up and down completely randomly.
Pair Corralation between Electronic Arts and Nordon Indstrias
Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.28 times more return on investment than Nordon Indstrias. However, Electronic Arts is 3.51 times less risky than Nordon Indstrias. It trades about 0.26 of its potential returns per unit of risk. Nordon Indstrias Metalrgicas is currently generating about -0.19 per unit of risk. If you would invest 38,971 in Electronic Arts on September 17, 2024 and sell it today you would earn a total of 8,510 from holding Electronic Arts or generate 21.84% 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. Nordon Indstrias Metalrgicas
Performance |
Timeline |
Electronic Arts |
Nordon Indstrias Met |
Electronic Arts and Nordon Indstrias Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Electronic Arts and Nordon Indstrias
The main advantage of trading using opposite Electronic Arts and Nordon Indstrias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Nordon Indstrias 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 Nordon Indstrias will offset losses from the drop in Nordon Indstrias' long position.Electronic Arts vs. Sumitomo Mitsui Financial | Electronic Arts vs. Credit Acceptance | Electronic Arts vs. Verizon Communications | Electronic Arts vs. British American Tobacco |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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