Correlation Between Take Two and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both Take Two and Fair Oaks 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 Fair Oaks 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 Fair Oaks Income, you can compare the effects of market volatilities on Take Two and Fair Oaks 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 Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Fair Oaks.
Diversification Opportunities for Take Two and Fair Oaks
Poor diversification
The 3 months correlation between Take and Fair is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income 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 Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of Take Two i.e., Take Two and Fair Oaks go up and down completely randomly.
Pair Corralation between Take Two and Fair Oaks
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 2.51 times more return on investment than Fair Oaks. However, Take Two is 2.51 times more volatile than Fair Oaks Income. It trades about 0.08 of its potential returns per unit of risk. Fair Oaks Income is currently generating about 0.1 per unit of risk. If you would invest 10,492 in Take Two Interactive Software on October 28, 2024 and sell it today you would earn a total of 7,809 from holding Take Two Interactive Software or generate 74.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.81% |
| Values | Daily Returns |
Take Two Interactive Software vs. Fair Oaks Income
Performance |
| Timeline |
| Take Two Interactive |
| Fair Oaks Income |
Take Two and Fair Oaks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Fair Oaks
The main advantage of trading using opposite Take Two and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.| Take Two vs. Axway Software SA | Take Two vs. Sabien Technology Group | Take Two vs. SMA Solar Technology | Take Two vs. International Biotechnology Trust |
| Fair Oaks vs. Ecclesiastical Insurance Office | Fair Oaks vs. Take Two Interactive Software | Fair Oaks vs. Zurich Insurance Group | Fair Oaks vs. Infrastrutture Wireless Italiane |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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