Correlation Between Electronic Arts and International Game
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and International Game 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 International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and International Game Technology, you can compare the effects of market volatilities on Electronic Arts and International Game 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 International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and International Game.
Diversification Opportunities for Electronic Arts and International Game
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Electronic and International is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game 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 International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Electronic Arts i.e., Electronic Arts and International Game go up and down completely randomly.
Pair Corralation between Electronic Arts and International Game
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.39 times more return on investment than International Game. However, Electronic Arts is 2.59 times less risky than International Game. It trades about -0.16 of its potential returns per unit of risk. International Game Technology is currently generating about -0.11 per unit of risk. If you would invest 13,052 in Electronic Arts on January 24, 2024 and sell it today you would lose (338.00) from holding Electronic Arts or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. International Game Technology
Performance |
| Timeline |
| Electronic Arts |
| International Game |
Electronic Arts and International Game Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and International Game
The main advantage of trading using opposite Electronic Arts and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, International Game 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 International Game will offset losses from the drop in International Game's long position.The idea behind Electronic Arts and International Game Technology 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.| International Game vs. NeogamesSA | International Game vs. Accel Entertainment | International Game vs. PlayAGS | International Game vs. Everi Holdings |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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