Correlation Between Cinemark Holdings and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Cinemark Holdings 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 Cinemark Holdings and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cinemark Holdings and Electronic Arts, you can compare the effects of market volatilities on Cinemark Holdings 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 Cinemark Holdings with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinemark Holdings and Electronic Arts.
Diversification Opportunities for Cinemark Holdings and Electronic Arts
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cinemark and Electronic is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cinemark Holdings and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Cinemark Holdings 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 Cinemark Holdings 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 Cinemark Holdings i.e., Cinemark Holdings and Electronic Arts go up and down completely randomly.
Pair Corralation between Cinemark Holdings and Electronic Arts
Considering the 90-day investment horizon Cinemark Holdings is expected to generate 2.52 times more return on investment than Electronic Arts. However, Cinemark Holdings is 2.52 times more volatile than Electronic Arts. It trades about 0.17 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.31 per unit of risk. If you would invest 1,681 in Cinemark Holdings on December 29, 2023 and sell it today you would earn a total of 126.00 from holding Cinemark Holdings or generate 7.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cinemark Holdings vs. Electronic Arts
Performance |
Timeline |
Cinemark Holdings |
Electronic Arts |
Cinemark Holdings and Electronic Arts Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cinemark Holdings and Electronic Arts
The main advantage of trading using opposite Cinemark Holdings and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cinemark Holdings 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.Cinemark Holdings vs. Sea | Cinemark Holdings vs. Grupo Televisa SAB | Cinemark Holdings vs. CuriosityStream | Cinemark Holdings vs. Marchex |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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