Correlation Between Take Two and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Take Two and STMicroelectronics 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 Take Two and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and STMicroelectronics NV, you can compare the effects of market volatilities on Take Two and STMicroelectronics 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 Take Two with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and STMicroelectronics.
Diversification Opportunities for Take Two and STMicroelectronics
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Take and STMicroelectronics is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Take Two 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 Take Two Interactive Software are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Take Two i.e., Take Two and STMicroelectronics go up and down completely randomly.
Pair Corralation between Take Two and STMicroelectronics
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.73 times more return on investment than STMicroelectronics. However, Take Two Interactive Software is 1.38 times less risky than STMicroelectronics. It trades about 0.06 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.06 per unit of risk. If you would invest 13,573 in Take Two Interactive Software on September 4, 2024 and sell it today you would earn a total of 5,222 from holding Take Two Interactive Software or generate 38.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Take Two Interactive Software vs. STMicroelectronics NV
Performance |
| Timeline |
| Take Two Interactive |
| STMicroelectronics |
Take Two and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and STMicroelectronics
The main advantage of trading using opposite Take Two and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Take Two vs. Samsung Electronics Co | Take Two vs. Samsung Electronics Co | Take Two vs. Hyundai Motor | Take Two vs. Toyota Motor Corp |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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