Correlation Between Take Two and Ford
Can any of the company-specific risk be diversified away by investing in both Take Two and Ford 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 Ford 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 Ford Motor, you can compare the effects of market volatilities on Take Two and Ford 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 Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Ford.
Diversification Opportunities for Take Two and Ford
Very poor diversification
The 3 months correlation between Take and Ford is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Take Two i.e., Take Two and Ford go up and down completely randomly.
Pair Corralation between Take Two and Ford
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.86 times more return on investment than Ford. However, Take Two Interactive Software is 1.16 times less risky than Ford. It trades about 0.3 of its potential returns per unit of risk. Ford Motor is currently generating about -0.08 per unit of risk. If you would invest 25,792 in Take Two Interactive Software on September 12, 2024 and sell it today you would earn a total of 2,684 from holding Take Two Interactive Software or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. Ford Motor
Performance |
| Timeline |
| Take Two Interactive |
| Ford Motor |
Take Two and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Ford
The main advantage of trading using opposite Take Two and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Take Two vs. Deutsche Bank Aktiengesellschaft | Take Two vs. Zoom Video Communications | Take Two vs. Automatic Data Processing | Take Two vs. Mitsubishi UFJ Financial |
| Ford vs. Taiwan Semiconductor Manufacturing | Ford vs. Tyson Foods | Ford vs. GP Investments | Ford vs. Apartment Investment and |
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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