Correlation Between Take Two and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Take Two and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on Take Two and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and DFS Furniture.
Diversification Opportunities for Take Two and DFS Furniture
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Take and DFS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Take Two i.e., Take Two and DFS Furniture go up and down completely randomly.
Pair Corralation between Take Two and DFS Furniture
Assuming the 90 days trading horizon Take Two is expected to generate 2.8 times less return on investment than DFS Furniture. But when comparing it to its historical volatility, Take Two Interactive Software is 1.8 times less risky than DFS Furniture. It trades about 0.16 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 12,900 in DFS Furniture PLC on September 14, 2024 and sell it today you would earn a total of 1,500 from holding DFS Furniture PLC or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. DFS Furniture PLC
Performance |
| Timeline |
| Take Two Interactive |
| DFS Furniture PLC |
Take Two and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and DFS Furniture
The main advantage of trading using opposite Take Two and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Take Two vs. Lowland Investment Co | Take Two vs. GoldMining | Take Two vs. Taylor Maritime Investments | Take Two vs. Empire Metals Limited |
| DFS Furniture vs. Discover Financial Services | DFS Furniture vs. Take Two Interactive Software | DFS Furniture vs. Alfa Financial Software | DFS Furniture vs. OneSavings Bank PLC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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