Correlation Between ELECTRONIC ARTS and PROSUS NV
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS and PROSUS NV 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 PROSUS NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and PROSUS NV ADR, you can compare the effects of market volatilities on ELECTRONIC ARTS and PROSUS NV 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 PROSUS NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and PROSUS NV.
Diversification Opportunities for ELECTRONIC ARTS and PROSUS NV
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ELECTRONIC and PROSUS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and PROSUS NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSUS NV ADR 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 PROSUS NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSUS NV ADR has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and PROSUS NV go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and PROSUS NV
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to under-perform the PROSUS NV. But the stock apears to be less risky and, when comparing its historical volatility, ELECTRONIC ARTS is 1.03 times less risky than PROSUS NV. The stock trades about -0.14 of its potential returns per unit of risk. The PROSUS NV ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 765.00 in PROSUS NV ADR on December 2, 2024 and sell it today you would earn a total of 50.00 from holding PROSUS NV ADR or generate 6.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ELECTRONIC ARTS vs. PROSUS NV ADR
Performance |
Timeline |
ELECTRONIC ARTS |
PROSUS NV ADR |
ELECTRONIC ARTS and PROSUS NV Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ELECTRONIC ARTS and PROSUS NV
The main advantage of trading using opposite ELECTRONIC ARTS and PROSUS NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS position performs unexpectedly, PROSUS NV 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 PROSUS NV will offset losses from the drop in PROSUS NV's long position.ELECTRONIC ARTS vs. UNIVMUSIC GRPADR050 | ELECTRONIC ARTS vs. G III APPAREL GROUP | ELECTRONIC ARTS vs. MOVIE GAMES SA | ELECTRONIC ARTS vs. GOME Retail Holdings |
PROSUS NV vs. Zijin Mining Group | PROSUS NV vs. De Grey Mining | PROSUS NV vs. AIR PRODCHEMICALS | PROSUS NV vs. EITZEN CHEMICALS |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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