Correlation Between GameSquare Holdings and Electronic Arts

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

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

Diversification Opportunities for GameSquare Holdings and Electronic Arts

-0.42

Correlation Coefficient

GameSquare Holdings  Electronic Arts

Very good diversification

The 3 months correlation between GameSquare and Electronic is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GameSquare Holdings and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and GameSquare Holdings 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 GameSquare Holdings are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of GameSquare Holdings i.e., GameSquare Holdings and Electronic Arts go up and down completely randomly.

Pair Corralation between GameSquare Holdings and Electronic Arts

Given the investment horizon of 90 days GameSquare Holdings is expected to under-perform the Electronic Arts. In addition to that, GameSquare Holdings is 1.89 times more volatile than Electronic Arts. It trades about -0.02 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.01 per unit of volatility. If you would invest  14,633  in Electronic Arts on December 28, 2024 and sell it today you would lose (70.00) from holding Electronic Arts or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

GameSquare Holdings  vs.  Electronic Arts

GameSquare Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days GameSquare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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. Despite somewhat strong basic indicators, Electronic Arts is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GameSquare Holdings and Electronic Arts

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

The idea behind GameSquare Holdings and Electronic Arts 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.