Correlation Between Meta Platforms and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Electronic Arts, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Electronic Arts.
Diversification Opportunities for Meta Platforms and Electronic Arts
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meta and Electronic is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Electronic Arts go up and down completely randomly.
Pair Corralation between Meta Platforms and Electronic Arts
Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Electronic Arts. In addition to that, Meta Platforms is 2.55 times more volatile than Electronic Arts. It trades about -0.14 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.02 per unit of volatility. If you would invest 11,836 in Electronic Arts on January 25, 2024 and sell it today you would earn a total of 878.00 from holding Electronic Arts or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 7.49% |
| Values | Daily Returns |
Meta Platforms vs. Electronic Arts
Performance |
| Timeline |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Electronic Arts |
Meta Platforms and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Electronic Arts
The main advantage of trading using opposite Meta Platforms and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |