Correlation Between Electronic Arts and Playtika Holding

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

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

Diversification Opportunities for Electronic Arts and Playtika Holding

0.64

Correlation Coefficient

Electronic Arts  Playtika Holding

Poor diversification

The 3 months correlation between Electronic and Playtika is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp 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 Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Electronic Arts i.e., Electronic Arts and Playtika Holding go up and down completely randomly.

Pair Corralation between Electronic Arts and Playtika Holding

Allowing for the 90-day total investment horizon Electronic Arts is expected to under-perform the Playtika Holding. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 2.35 times less risky than Playtika Holding. The stock trades about -0.12 of its potential returns per unit of risk. The Playtika Holding Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  694.00  in Playtika Holding Corp on January 26, 2024 and sell it today you would earn a total of  18.00  from holding Playtika Holding Corp or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Electronic Arts  vs.  Playtika Holding Corp

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 fragile 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.

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Playtika Holding is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Electronic Arts and Playtika Holding

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

The idea behind Electronic Arts and Playtika Holding Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..