ELECTRONIC ARTS INC.

80.86 -2.08 (-2.57%) Sell

Don't invest in EA now, it is a risky investment

13 min read

EA delivered massive losses today. On a longer term basis, investors in ELECTRONIC ARTS INC. made -0.11% per day. Thursday's performance of -2.57% was a underperformance compared to it's daily average.

[Themes containing EA]

EA showed a strong bearish trend over the last 3 months. During this period EA delivered -29.24% and saw a maximum drawdown of -32.89%. There was a short signal during this period which returned +27.37%.

Trend

EA has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 12 Jul, 2018 to 3 Dec, 2018. Over the last 2 years 11 months and 9 days, EA underperformed the SP500 index on 48% days. Which indicates that on days EA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months EA was mostly loss making and delivered on average -0.53% per day. It's best return during this period (of +3.99%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -5.31%) was on Friday, 9 Nov, 2018. The longest stort-term trend during this period was 9 losing days, which started on 1 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -14.9% of investor capital.

The last 12 months saw EA's investors making profits in 4 months and incurring losses in 8 months. EA was less consistent in delivering monthly returs than SP500 index. EA was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -22.6% compared to -7.28% returned by SP500 index in Oct 2018. EA had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -5.18%.

If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.
-- Edmund Burke

EA is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in EA's volatility from 25 Sep, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that EA has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in EA derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than EA. Therefore, SP500 must receive a lower allocation than EA in your portfolio. SP500 index usually has shorter drawdown period than EA.

On a general note (since you are interested in EA), APRN has performed really well and deserves to be closely tracked for investment opportunities.

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