Correlation Between Take Two and Illumina
Can any of the company-specific risk be diversified away by investing in both Take Two and Illumina 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 Illumina 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 Illumina, you can compare the effects of market volatilities on Take Two and Illumina 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 Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Illumina.
Diversification Opportunities for Take Two and Illumina
Very poor diversification
The 3 months correlation between Take and Illumina is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Take Two i.e., Take Two and Illumina go up and down completely randomly.
Pair Corralation between Take Two and Illumina
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.75 times more return on investment than Illumina. However, Take Two Interactive Software is 1.34 times less risky than Illumina. It trades about 0.07 of its potential returns per unit of risk. Illumina is currently generating about 0.01 per unit of risk. If you would invest 18,162 in Take Two Interactive Software on September 12, 2024 and sell it today you would earn a total of 9,178 from holding Take Two Interactive Software or generate 50.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.44% |
| Values | Daily Returns |
Take Two Interactive Software vs. Illumina
Performance |
| Timeline |
| Take Two Interactive |
| Illumina |
Take Two and Illumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Illumina
The main advantage of trading using opposite Take Two and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Illumina 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 Illumina will offset losses from the drop in Illumina'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 |
| Illumina vs. Zoom Video Communications | Illumina vs. GP Investments | Illumina vs. Take Two Interactive Software | Illumina vs. Monster Beverage |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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