Correlation Between New Oriental and Take Two
Can any of the company-specific risk be diversified away by investing in both New Oriental and Take Two 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 New Oriental and Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Take Two Interactive Software, you can compare the effects of market volatilities on New Oriental and Take Two 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 New Oriental with a short position of Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Take Two.
Diversification Opportunities for New Oriental and Take Two
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and Take is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive and New Oriental 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 New Oriental Education are associated (or correlated) with Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of New Oriental i.e., New Oriental and Take Two go up and down completely randomly.
Pair Corralation between New Oriental and Take Two
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Take Two. In addition to that, New Oriental is 2.09 times more volatile than Take Two Interactive Software. It trades about -0.17 of its total potential returns per unit of risk. Take Two Interactive Software is currently generating about -0.05 per unit of volatility. If you would invest 28,594 in Take Two Interactive Software on October 31, 2024 and sell it today you would lose (1,044) from holding Take Two Interactive Software or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
New Oriental Education vs. Take Two Interactive Software
Performance |
| Timeline |
| New Oriental Education |
| Take Two Interactive |
New Oriental and Take Two Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Take Two
The main advantage of trading using opposite New Oriental and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Take Two 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 Take Two will offset losses from the drop in Take Two's long position.| New Oriental vs. Caesars Entertainment, | New Oriental vs. JB Hunt Transport | New Oriental vs. Extra Space Storage | New Oriental vs. Fresenius Medical Care |
| Take Two vs. Academy Sports and | Take Two vs. Guidewire Software, | Take Two vs. Chunghwa Telecom Co, | Take Two vs. Marfrig Global Foods |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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