Correlation Between Electronic Arts and EAST SIDE

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

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

Diversification Opportunities for Electronic Arts and EAST SIDE

-0.66

Correlation Coefficient

Electronic Arts  EAST SIDE

Excellent diversification

The 3 months correlation between Electronic and EAST is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and EAST SIDE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST SIDE GAMES 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 EAST SIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST SIDE GAMES has no effect on the direction of Electronic Arts i.e., Electronic Arts and EAST SIDE go up and down completely randomly.

Pair Corralation between Electronic Arts and EAST SIDE

Assuming the 90 days horizon Electronic Arts is expected to under-perform the EAST SIDE. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 5.46 times less risky than EAST SIDE. The stock trades about -0.38 of its potential returns per unit of risk. The EAST SIDE GAMES is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  39.00  in EAST SIDE GAMES on September 22, 2024 and sell it today you would lose (5.00) from holding EAST SIDE GAMES or give up 12.82% 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.  EAST SIDE GAMES

Electronic Arts

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Electronic Arts reported solid returns over the last few months and may actually be approaching a breakup point.

EAST SIDE GAMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAST SIDE GAMES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Electronic Arts and EAST SIDE

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

The idea behind Electronic Arts and EAST SIDE GAMES 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.