Correlation Between IShares Physical and Electronic Arts

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

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

Diversification Opportunities for IShares Physical and Electronic Arts

-0.23

Correlation Coefficient

IShares Physical  Electronic Arts

Very good diversification

The 3 months correlation between IShares and Electronic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and IShares Physical 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 iShares Physical Silver 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 IShares Physical i.e., IShares Physical and Electronic Arts go up and down completely randomly.

Pair Corralation between IShares Physical and Electronic Arts

Assuming the 90 days trading horizon iShares Physical Silver is expected to generate 0.5 times more return on investment than Electronic Arts. However, iShares Physical Silver is 2.02 times less risky than Electronic Arts. It trades about 0.17 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.01 per unit of risk. If you would invest  2,815  in iShares Physical Silver on December 26, 2024 and sell it today you would earn a total of  398.00  from holding iShares Physical Silver or generate 14.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

iShares Physical Silver  vs.  Electronic Arts

iShares Physical Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively stable basic indicators, Electronic Arts is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Physical and Electronic Arts

The main advantage of trading using opposite IShares Physical and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Physical 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 iShares Physical Silver 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.

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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.