Correlation Between FirstGroup Plc and Take-Two Interactive
Can any of the company-specific risk be diversified away by investing in both FirstGroup Plc and Take-Two Interactive 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 FirstGroup Plc and Take-Two Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstGroup plc and Take Two Interactive Software, you can compare the effects of market volatilities on FirstGroup Plc and Take-Two Interactive 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 FirstGroup Plc with a short position of Take-Two Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstGroup Plc and Take-Two Interactive.
Diversification Opportunities for FirstGroup Plc and Take-Two Interactive
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between FirstGroup and Take-Two is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FirstGroup plc 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 FirstGroup Plc 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 FirstGroup plc are associated (or correlated) with Take-Two Interactive. 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 FirstGroup Plc i.e., FirstGroup Plc and Take-Two Interactive go up and down completely randomly.
Pair Corralation between FirstGroup Plc and Take-Two Interactive
Assuming the 90 days horizon FirstGroup Plc is expected to generate 3.28 times less return on investment than Take-Two Interactive. But when comparing it to its historical volatility, FirstGroup plc is 2.46 times less risky than Take-Two Interactive. It trades about 0.12 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 17,744 in Take Two Interactive Software on December 8, 2024 and sell it today you would earn a total of 2,068 from holding Take Two Interactive Software or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstGroup plc vs. Take Two Interactive Software
Performance |
| Timeline |
| FirstGroup plc |
| Take Two Interactive |
FirstGroup Plc and Take-Two Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstGroup Plc and Take-Two Interactive
The main advantage of trading using opposite FirstGroup Plc and Take-Two Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstGroup Plc position performs unexpectedly, Take-Two Interactive 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 Interactive will offset losses from the drop in Take-Two Interactive's long position.| FirstGroup Plc vs. TRAVEL LEISURE DL 01 | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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