Correlation Between Take Two and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Take Two and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on Take Two and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and CNH Industrial.
Diversification Opportunities for Take Two and CNH Industrial
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Take and CNH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Take Two i.e., Take Two and CNH Industrial go up and down completely randomly.
Pair Corralation between Take Two and CNH Industrial
Assuming the 90 days trading horizon Take Two is expected to generate 3.9 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, Take Two Interactive Software is 2.58 times less risky than CNH Industrial. It trades about 0.15 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,055 in CNH Industrial NV on November 2, 2024 and sell it today you would earn a total of 203.00 from holding CNH Industrial NV or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. CNH Industrial NV
Performance |
| Timeline |
| Take Two Interactive |
| CNH Industrial NV |
Take Two and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and CNH Industrial
The main advantage of trading using opposite Take Two and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Take Two vs. Adriatic Metals | Take Two vs. Rheinmetall AG | Take Two vs. InterContinental Hotels Group | Take Two vs. Europa Metals |
| CNH Industrial vs. One Media iP | CNH Industrial vs. Take Two Interactive Software | CNH Industrial vs. Vietnam Enterprise Investments | CNH Industrial vs. Axway Software SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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