Correlation Between Xos Equity and Electronic Arts

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

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

Diversification Opportunities for Xos Equity and Electronic Arts

-0.61

Correlation Coefficient

Xos Equity  Electronic Arts

Excellent diversification

The 3 months correlation between Xos and Electronic is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Xos Equity 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 Xos Equity Warrants 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 Xos Equity i.e., Xos Equity and Electronic Arts go up and down completely randomly.

Pair Corralation between Xos Equity and Electronic Arts

Assuming the 90 days horizon Xos Equity Warrants is expected to generate 60.86 times more return on investment than Electronic Arts. However, Xos Equity is 60.86 times more volatile than Electronic Arts. It trades about 0.08 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.06 per unit of risk. If you would invest  4.90  in Xos Equity Warrants on October 5, 2024 and sell it today you would lose (3.39) from holding Xos Equity Warrants or give up 69.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Xos Equity Warrants  vs.  Electronic Arts

Xos Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Equity Warrants 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 fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Electronic Arts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Xos Equity and Electronic Arts

The main advantage of trading using opposite Xos Equity and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos Equity 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 Xos Equity Warrants 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.