Correlation Between UbiSoft Entertainment and Electronic Arts

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

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

Diversification Opportunities for UbiSoft Entertainment and Electronic Arts

0.58

Correlation Coefficient

UbiSoft Entertainment  Electronic Arts

Very weak diversification

The 3 months correlation between UbiSoft and Electronic is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding UbiSoft Entertainment and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and UbiSoft Entertainment 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 UbiSoft Entertainment 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 UbiSoft Entertainment i.e., UbiSoft Entertainment and Electronic Arts go up and down completely randomly.

Pair Corralation between UbiSoft Entertainment and Electronic Arts

Assuming the 90 days horizon UbiSoft Entertainment is expected to generate 1.57 times more return on investment than Electronic Arts. However, UbiSoft Entertainment is 1.57 times more volatile than Electronic Arts. It trades about 0.02 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.01 per unit of risk. If you would invest  273.00  in UbiSoft Entertainment on December 30, 2024 and sell it today you would lose (1.00) from holding UbiSoft Entertainment or give up 0.37% of portfolio value over 90 days.

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

UbiSoft Entertainment  vs.  Electronic Arts

UbiSoft Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UbiSoft Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, UbiSoft Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 UbiSoft Entertainment and Electronic Arts

The main advantage of trading using opposite UbiSoft Entertainment and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UbiSoft Entertainment 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 UbiSoft Entertainment 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.