Correlation Between Take Two and Compass Group
Can any of the company-specific risk be diversified away by investing in both Take Two and Compass Group 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 Compass Group 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 Compass Group PLC, you can compare the effects of market volatilities on Take Two and Compass Group 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Compass Group.
Diversification Opportunities for Take Two and Compass Group
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Take and Compass is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Take Two i.e., Take Two and Compass Group go up and down completely randomly.
Pair Corralation between Take Two and Compass Group
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.43 times more return on investment than Compass Group. However, Take Two is 1.43 times more volatile than Compass Group PLC. It trades about 0.22 of its potential returns per unit of risk. Compass Group PLC is currently generating about 0.21 per unit of risk. If you would invest 18,012 in Take Two Interactive Software on September 13, 2024 and sell it today you would earn a total of 1,016 from holding Take Two Interactive Software or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. Compass Group PLC
Performance |
| Timeline |
| Take Two Interactive |
| Compass Group PLC |
Take Two and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Compass Group
The main advantage of trading using opposite Take Two and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| Take Two vs. Aurora Investment Trust | Take Two vs. Bankers Investment Trust | Take Two vs. FC Investment Trust | Take Two vs. Intuitive Investments Group |
| Compass Group vs. Berkshire Hathaway | Compass Group vs. Hyundai Motor | Compass Group vs. Samsung Electronics Co | Compass Group vs. Samsung Electronics Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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