Correlation Between Electronic Arts and Giga Media
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and Giga Media 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 Giga Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and Giga Media, you can compare the effects of market volatilities on Electronic Arts and Giga Media 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 Giga Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and Giga Media.
Diversification Opportunities for Electronic Arts and Giga Media
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Electronic and Giga is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Giga Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga Media 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 Giga Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga Media has no effect on the direction of Electronic Arts i.e., Electronic Arts and Giga Media go up and down completely randomly.
Pair Corralation between Electronic Arts and Giga Media
Allowing for the 90-day total investment horizon Electronic Arts is expected to under-perform the Giga Media. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 2.76 times less risky than Giga Media. The stock trades about -0.28 of its potential returns per unit of risk. The Giga Media is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 129.00 in Giga Media on January 18, 2024 and sell it today you would earn a total of 1.00 from holding Giga Media or generate 0.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Electronic Arts vs. Giga Media
Performance |
Timeline |
Electronic Arts |
Giga Media |
Electronic Arts and Giga Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Electronic Arts and Giga Media
The main advantage of trading using opposite Electronic Arts and Giga Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, Giga Media 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 Giga Media will offset losses from the drop in Giga Media's long position.Electronic Arts vs. Nintendo Co ADR | Electronic Arts vs. Playtika Holding Corp | Electronic Arts vs. Doubledown InteractiveCo |
Giga Media vs. Nintendo Co ADR | Giga Media vs. Playtika Holding Corp | Giga Media vs. Doubledown InteractiveCo |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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