Correlation Between Fras Le and Take Two
Can any of the company-specific risk be diversified away by investing in both Fras Le 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 Fras Le and Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and Take Two Interactive Software, you can compare the effects of market volatilities on Fras Le 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 Fras Le with a short position of Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Take Two.
Diversification Opportunities for Fras Le and Take Two
Average diversification
The 3 months correlation between Fras and Take is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA 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 Fras Le 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 Fras le SA 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 Fras Le i.e., Fras Le and Take Two go up and down completely randomly.
Pair Corralation between Fras Le and Take Two
Assuming the 90 days trading horizon Fras Le is expected to generate 1.05 times less return on investment than Take Two. But when comparing it to its historical volatility, Fras le SA is 1.24 times less risky than Take Two. It trades about 0.11 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 16,247 in Take Two Interactive Software on August 31, 2024 and sell it today you would earn a total of 12,095 from holding Take Two Interactive Software or generate 74.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fras le SA vs. Take Two Interactive Software
Performance |
| Timeline |
| Fras le SA |
| Take Two Interactive |
Fras Le and Take Two Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and Take Two
The main advantage of trading using opposite Fras Le and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le 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.The idea behind Fras le SA and Take Two Interactive Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Take Two vs. Electronic Arts | Take Two vs. Fras le SA | Take Two vs. Energisa SA | Take Two vs. Clave Indices De |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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