Correlation Between Take Two and British American
Can any of the company-specific risk be diversified away by investing in both Take Two and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on Take Two and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and British American.
Diversification Opportunities for Take Two and British American
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Take and British is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Take Two i.e., Take Two and British American go up and down completely randomly.
Pair Corralation between Take Two and British American
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.89 times more return on investment than British American. However, Take Two is 1.89 times more volatile than British American Tobacco. It trades about 0.45 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.33 per unit of risk. If you would invest 22,792 in Take Two Interactive Software on August 23, 2024 and sell it today you would earn a total of 4,447 from holding Take Two Interactive Software or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. British American Tobacco
Performance |
| Timeline |
| Take Two Interactive |
| British American Tobacco |
Take Two and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and British American
The main advantage of trading using opposite Take Two and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Take Two vs. Zoom Video Communications | Take Two vs. Verizon Communications | Take Two vs. Bemobi Mobile Tech | Take Two vs. Dell Technologies |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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