Correlation Between Playtika Holding and Electronic Arts

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

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

Diversification Opportunities for Playtika Holding and Electronic Arts

0.85

Correlation Coefficient

Playtika Holding  Electronic Arts

Very poor diversification

The 3 months correlation between Playtika and Electronic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Playtika Holding 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 Playtika Holding Corp 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 Playtika Holding i.e., Playtika Holding and Electronic Arts go up and down completely randomly.

Pair Corralation between Playtika Holding and Electronic Arts

Given the investment horizon of 90 days Playtika Holding Corp is expected to under-perform the Electronic Arts. In addition to that, Playtika Holding is 1.85 times more volatile than Electronic Arts. It trades about -0.28 of its total potential returns per unit of risk. Electronic Arts is currently generating about -0.24 per unit of volatility. If you would invest  16,382  in Electronic Arts on September 19, 2024 and sell it today you would lose (903.00) from holding Electronic Arts or give up 5.51% of portfolio value over 90 days.

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

Playtika Holding Corp  vs.  Electronic Arts

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 latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Electronic Arts

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Electronic Arts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Playtika Holding and Electronic Arts

The main advantage of trading using opposite Playtika Holding and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtika Holding 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.

The idea behind Playtika Holding Corp and Electronic Arts 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 Positions Ratings module to 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.