Correlation Between Electronic Arts and LATAM Airlines
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and LATAM Airlines 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 LATAM Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and LATAM Airlines Group, you can compare the effects of market volatilities on Electronic Arts and LATAM Airlines 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 LATAM Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and LATAM Airlines.
Diversification Opportunities for Electronic Arts and LATAM Airlines
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronic and LATAM is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and LATAM Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LATAM Airlines Group 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 LATAM Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LATAM Airlines Group has no effect on the direction of Electronic Arts i.e., Electronic Arts and LATAM Airlines go up and down completely randomly.
Pair Corralation between Electronic Arts and LATAM Airlines
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 1.01 times more return on investment than LATAM Airlines. However, Electronic Arts is 1.01 times more volatile than LATAM Airlines Group. It trades about 0.15 of its potential returns per unit of risk. LATAM Airlines Group is currently generating about 0.05 per unit of risk. If you would invest 16,973 in Electronic Arts on September 11, 2025 and sell it today you would earn a total of 3,409 from holding Electronic Arts or generate 20.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. LATAM Airlines Group
Performance |
| Timeline |
| Electronic Arts |
| LATAM Airlines Group |
Electronic Arts and LATAM Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and LATAM Airlines
The main advantage of trading using opposite Electronic Arts and LATAM Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, LATAM Airlines 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 LATAM Airlines will offset losses from the drop in LATAM Airlines' long position.| Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Ubiquiti Networks | Electronic Arts vs. Monolithic Power Systems | Electronic Arts vs. NXP Semiconductors NV |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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