Correlation Between Take Two and Home Depot
Can any of the company-specific risk be diversified away by investing in both Take Two and Home Depot 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 Home Depot 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 The Home Depot, you can compare the effects of market volatilities on Take Two and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Home Depot.
Diversification Opportunities for Take Two and Home Depot
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Take and Home is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Take Two i.e., Take Two and Home Depot go up and down completely randomly.
Pair Corralation between Take Two and Home Depot
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.2 times more return on investment than Home Depot. However, Take Two is 1.2 times more volatile than The Home Depot. It trades about 0.08 of its potential returns per unit of risk. The Home Depot is currently generating about 0.06 per unit of risk. If you would invest 14,586 in Take Two Interactive Software on August 26, 2024 and sell it today you would earn a total of 12,616 from holding Take Two Interactive Software or generate 86.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Take Two Interactive Software vs. The Home Depot
Performance |
| Timeline |
| Take Two Interactive |
| Home Depot |
Take Two and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Home Depot
The main advantage of trading using opposite Take Two and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Take Two vs. Technos SA | Take Two vs. Palantir Technologies | Take Two vs. Deutsche Bank Aktiengesellschaft | Take Two vs. Align Technology |
| Home Depot vs. Fras le SA | Home Depot vs. Clave Indices De | Home Depot vs. BTG Pactual Logstica | Home Depot vs. Telefonaktiebolaget LM Ericsson |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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