Correlation Between Take Two and Companhia
Can any of the company-specific risk be diversified away by investing in both Take Two and Companhia 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 Companhia 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 Companhia de Fiacao, you can compare the effects of market volatilities on Take Two and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Companhia.
Diversification Opportunities for Take Two and Companhia
Very good diversification
The 3 months correlation between Take and Companhia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Companhia de Fiacao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Fiacao 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Fiacao has no effect on the direction of Take Two i.e., Take Two and Companhia go up and down completely randomly.
Pair Corralation between Take Two and Companhia
Assuming the 90 days trading horizon Take Two is expected to generate 1.66 times less return on investment than Companhia. But when comparing it to its historical volatility, Take Two Interactive Software is 2.77 times less risky than Companhia. It trades about 0.27 of its potential returns per unit of risk. Companhia de Fiacao is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Companhia de Fiacao on September 13, 2024 and sell it today you would earn a total of 299.00 from holding Companhia de Fiacao or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Take Two Interactive Software vs. Companhia de Fiacao
Performance |
| Timeline |
| Take Two Interactive |
| Companhia de Fiacao |
Take Two and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Companhia
The main advantage of trading using opposite Take Two and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| Take Two vs. Taiwan Semiconductor Manufacturing | Take Two vs. Zoom Video Communications | Take Two vs. Spotify Technology SA | Take Two vs. G2D Investments |
| Companhia vs. CVS Health | Companhia vs. Lloyds Banking Group | Companhia vs. Mitsubishi UFJ Financial | Companhia vs. Ameriprise Financial |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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