Correlation Between Electronic Arts and Enthusiast Gaming

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

By analyzing existing cross correlation between Electronic Arts and Enthusiast Gaming Holdings, you can compare the effects of market volatilities on Electronic Arts and Enthusiast Gaming 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 Enthusiast Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Enthusiast Gaming.

Diversification Opportunities for Electronic Arts and Enthusiast Gaming

0.66

Correlation Coefficient

Electronic Arts  Enthusiast Gaming

Poor diversification

The 3 months correlation between Electronic and Enthusiast is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Enthusiast Gaming Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enthusiast Gaming 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 Enthusiast Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enthusiast Gaming has no effect on the direction of Electronic Arts i.e., Electronic Arts and Enthusiast Gaming go up and down completely randomly.

Pair Corralation between Electronic Arts and Enthusiast Gaming

If you would invest (100.00) in Enthusiast Gaming Holdings on January 16, 2024 and sell it today you would earn a total of  100.00  from holding Enthusiast Gaming Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Electronic Arts  vs.  Enthusiast Gaming Holdings

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.

Enthusiast Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enthusiast Gaming Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Enthusiast Gaming is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electronic Arts and Enthusiast Gaming

The main advantage of trading using opposite Electronic Arts and Enthusiast Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Enthusiast Gaming 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 Enthusiast Gaming will offset losses from the drop in Enthusiast Gaming's long position.

The idea behind Electronic Arts and Enthusiast Gaming Holdings 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.