Correlation Between Take Two and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Take Two and DXC Technology 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 DXC Technology 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 DXC Technology, you can compare the effects of market volatilities on Take Two and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and DXC Technology.
Diversification Opportunities for Take Two and DXC Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Take and DXC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and DXC Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Take Two i.e., Take Two and DXC Technology go up and down completely randomly.
Pair Corralation between Take Two and DXC Technology
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.76 times more return on investment than DXC Technology. However, Take Two Interactive Software is 1.32 times less risky than DXC Technology. It trades about 0.08 of its potential returns per unit of risk. DXC Technology is currently generating about 0.0 per unit of risk. If you would invest 13,649 in Take Two Interactive Software on October 27, 2024 and sell it today you would earn a total of 13,539 from holding Take Two Interactive Software or generate 99.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.79% |
| Values | Daily Returns |
Take Two Interactive Software vs. DXC Technology
Performance |
| Timeline |
| Take Two Interactive |
| DXC Technology |
Take Two and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and DXC Technology
The main advantage of trading using opposite Take Two and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Take Two vs. Arrow Electronics, | Take Two vs. Iron Mountain Incorporated | Take Two vs. JB Hunt Transport | Take Two vs. Martin Marietta Materials, |
| DXC Technology vs. Ares Management | DXC Technology vs. Broadridge Financial Solutions, | DXC Technology vs. Align Technology | DXC Technology vs. Waste Management |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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