Correlation Between Mobile Global and Electronic Arts

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

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

Diversification Opportunities for Mobile Global and Electronic Arts

0.7

Correlation Coefficient

Mobile Global  Electronic Arts

Poor diversification

The 3 months correlation between Mobile and Electronic is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Global Esports and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Mobile Global 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 Mobile Global Esports 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 Mobile Global i.e., Mobile Global and Electronic Arts go up and down completely randomly.

Pair Corralation between Mobile Global and Electronic Arts

Given the investment horizon of 90 days Mobile Global Esports is expected to under-perform the Electronic Arts. In addition to that, Mobile Global is 12.56 times more volatile than Electronic Arts. It trades about -0.09 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.05 per unit of volatility. If you would invest  12,114  in Electronic Arts on January 28, 2024 and sell it today you would earn a total of  676.00  from holding Electronic Arts or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.0%
Values	Daily Returns

Mobile Global Esports  vs.  Electronic Arts

Mobile Global Esports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobile Global Esports has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Electronic Arts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Arts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Mobile Global and Electronic Arts

The main advantage of trading using opposite Mobile Global and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobile Global 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 Mobile Global Esports 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.