Correlation Between Take Two and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Take Two and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey PLC, you can compare the effects of market volatilities on Take Two and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Johnson Matthey.
Diversification Opportunities for Take Two and Johnson Matthey
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Take and Johnson is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Take Two i.e., Take Two and Johnson Matthey go up and down completely randomly.
Pair Corralation between Take Two and Johnson Matthey
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.89 times more return on investment than Johnson Matthey. However, Take Two Interactive Software is 1.12 times less risky than Johnson Matthey. It trades about 0.04 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about -0.02 per unit of risk. If you would invest 14,440 in Take Two Interactive Software on October 16, 2024 and sell it today you would earn a total of 3,460 from holding Take Two Interactive Software or generate 23.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.75% |
| Values | Daily Returns |
Take Two Interactive Software vs. Johnson Matthey PLC
Performance |
| Timeline |
| Take Two Interactive |
| Johnson Matthey PLC |
Take Two and Johnson Matthey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Johnson Matthey
The main advantage of trading using opposite Take Two and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey's long position.| Take Two vs. Ross Stores | Take Two vs. Air Products Chemicals | Take Two vs. Hochschild Mining plc | Take Two vs. Erste Group Bank |
| Johnson Matthey vs. Take Two Interactive Software | Johnson Matthey vs. Samsung Electronics Co | Johnson Matthey vs. LPKF Laser Electronics | Johnson Matthey vs. Pets at Home |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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