Correlation Between International Game and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both International Game 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 International Game and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Game Technology and Electronic Arts, you can compare the effects of market volatilities on International Game 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 International Game with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and Electronic Arts.
Diversification Opportunities for International Game and Electronic Arts
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Electronic is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and International Game 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 International Game Technology 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 International Game i.e., International Game and Electronic Arts go up and down completely randomly.
Pair Corralation between International Game and Electronic Arts
Considering the 90-day investment horizon International Game Technology is expected to under-perform the Electronic Arts. In addition to that, International Game is 2.59 times more volatile than Electronic Arts. It trades about -0.12 of its total potential returns per unit of risk. Electronic Arts is currently generating about -0.16 per unit of volatility. If you would invest 13,052 in Electronic Arts on January 24, 2024 and sell it today you would lose (340.00) from holding Electronic Arts or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Game Technology vs. Electronic Arts
Performance |
| Timeline |
| International Game |
| Electronic Arts |
International Game and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and Electronic Arts
The main advantage of trading using opposite International Game and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game 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.| 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 CEOs Directory module to screen CEOs from public companies around the world.
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