Correlation Between Electronic Arts and Vishay Intertechnology

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

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

Diversification Opportunities for Electronic Arts and Vishay Intertechnology

-0.38

Correlation Coefficient

Electronic Arts  Vishay Intertechnology

Very good diversification

The 3 months correlation between Electronic and Vishay is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Electronic Arts i.e., Electronic Arts and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Electronic Arts and Vishay Intertechnology

Assuming the 90 days trading horizon Electronic Arts is expected to generate 0.42 times more return on investment than Vishay Intertechnology. However, Electronic Arts is 2.37 times less risky than Vishay Intertechnology. It trades about 0.24 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about 0.05 per unit of risk. If you would invest  13,324  in Electronic Arts on September 4, 2024 and sell it today you would earn a total of  2,366  from holding Electronic Arts or generate 17.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Electronic Arts  vs.  Vishay Intertechnology

Electronic Arts

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Electronic Arts unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vishay Intertechnology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vishay Intertechnology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Electronic Arts and Vishay Intertechnology

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

The idea behind Electronic Arts and Vishay Intertechnology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.