Correlation Between Electronic Arts and AXWAY SOFTWARE

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

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

Diversification Opportunities for Electronic Arts and AXWAY SOFTWARE

0.31

Correlation Coefficient

Electronic Arts  AXWAY SOFTWARE

Weak diversification

The 3 months correlation between Electronic and AXWAY is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and AXWAY SOFTWARE EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXWAY SOFTWARE EO 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 AXWAY SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXWAY SOFTWARE EO has no effect on the direction of Electronic Arts i.e., Electronic Arts and AXWAY SOFTWARE go up and down completely randomly.

Pair Corralation between Electronic Arts and AXWAY SOFTWARE

Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the AXWAY SOFTWARE. In addition to that, Electronic Arts is 2.54 times more volatile than AXWAY SOFTWARE EO. It trades about -0.1 of its total potential returns per unit of risk. AXWAY SOFTWARE EO is currently generating about 0.02 per unit of volatility. If you would invest  2,700  in AXWAY SOFTWARE EO on November 29, 2024 and sell it today you would earn a total of  30.00  from holding AXWAY SOFTWARE EO or generate 1.11% return on investment over 90 days.

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

Electronic Arts  vs.  AXWAY SOFTWARE EO

Electronic Arts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electronic Arts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AXWAY SOFTWARE EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AXWAY SOFTWARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Electronic Arts and AXWAY SOFTWARE

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

The idea behind Electronic Arts and AXWAY SOFTWARE EO 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.