Correlation Between AXWAY SOFTWARE and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both AXWAY SOFTWARE 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 AXWAY SOFTWARE and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXWAY SOFTWARE EO and ELECTRONIC ARTS, you can compare the effects of market volatilities on AXWAY SOFTWARE 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 AXWAY SOFTWARE with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXWAY SOFTWARE and ELECTRONIC ARTS.
Diversification Opportunities for AXWAY SOFTWARE and ELECTRONIC ARTS
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AXWAY and ELECTRONIC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AXWAY SOFTWARE EO and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and AXWAY SOFTWARE 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 AXWAY SOFTWARE EO 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 AXWAY SOFTWARE i.e., AXWAY SOFTWARE and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between AXWAY SOFTWARE and ELECTRONIC ARTS
Assuming the 90 days horizon AXWAY SOFTWARE is expected to generate 1.05 times less return on investment than ELECTRONIC ARTS. In addition to that, AXWAY SOFTWARE is 1.62 times more volatile than ELECTRONIC ARTS. It trades about 0.03 of its total potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.06 per unit of volatility. If you would invest 13,047 in ELECTRONIC ARTS on September 25, 2024 and sell it today you would earn a total of 1,151 from holding ELECTRONIC ARTS or generate 8.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
AXWAY SOFTWARE EO vs. ELECTRONIC ARTS
Performance |
Timeline |
AXWAY SOFTWARE EO |
ELECTRONIC ARTS |
AXWAY SOFTWARE and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AXWAY SOFTWARE and ELECTRONIC ARTS
The main advantage of trading using opposite AXWAY SOFTWARE and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXWAY SOFTWARE 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's long position.AXWAY SOFTWARE vs. Salesforce | AXWAY SOFTWARE vs. ServiceNow | AXWAY SOFTWARE vs. Uber Technologies | AXWAY SOFTWARE vs. Shopify |
ELECTRONIC ARTS vs. Magic Software Enterprises | ELECTRONIC ARTS vs. AXWAY SOFTWARE EO | ELECTRONIC ARTS vs. Japan Tobacco | ELECTRONIC ARTS vs. CPU SOFTWAREHOUSE |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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