Correlation Between Take Two and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Take Two and Metalurgica Gerdau 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 Metalurgica Gerdau 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 Metalurgica Gerdau SA, you can compare the effects of market volatilities on Take Two and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Metalurgica Gerdau.
Diversification Opportunities for Take Two and Metalurgica Gerdau
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Take and Metalurgica is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Take Two i.e., Take Two and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Take Two and Metalurgica Gerdau
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.18 times more return on investment than Metalurgica Gerdau. However, Take Two is 1.18 times more volatile than Metalurgica Gerdau SA. It trades about 0.13 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.04 per unit of risk. If you would invest 18,226 in Take Two Interactive Software on August 27, 2024 and sell it today you would earn a total of 8,976 from holding Take Two Interactive Software or generate 49.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Take Two Interactive |
| Metalurgica Gerdau |
Take Two and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Metalurgica Gerdau
The main advantage of trading using opposite Take Two and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Take Two vs. Deutsche Bank Aktiengesellschaft | Take Two vs. Verizon Communications | Take Two vs. GP Investments | Take Two vs. Charter Communications |
| Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Metalurgica Gerdau SA | Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Bradespar SA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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