Correlation Between Take Two and Lennar
Can any of the company-specific risk be diversified away by investing in both Take Two and Lennar 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 Lennar 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 Lennar, you can compare the effects of market volatilities on Take Two and Lennar 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 Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Lennar.
Diversification Opportunities for Take Two and Lennar
Very good diversification
The 3 months correlation between Take and Lennar is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar 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 Lennar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar has no effect on the direction of Take Two i.e., Take Two and Lennar go up and down completely randomly.
Pair Corralation between Take Two and Lennar
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.77 times more return on investment than Lennar. However, Take Two Interactive Software is 1.29 times less risky than Lennar. It trades about 0.42 of its potential returns per unit of risk. Lennar is currently generating about 0.03 per unit of risk. If you would invest 20,916 in Take Two Interactive Software on August 30, 2024 and sell it today you would earn a total of 6,616 from holding Take Two Interactive Software or generate 31.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.12% |
| Values | Daily Returns |
Take Two Interactive Software vs. Lennar
Performance |
| Timeline |
| Take Two Interactive |
| Lennar |
Take Two and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Lennar
The main advantage of trading using opposite Take Two and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Lennar 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 Lennar will offset losses from the drop in Lennar's long position.| Take Two vs. Iron Mountain Incorporated | Take Two vs. Brpr Corporate Offices | Take Two vs. British American Tobacco | Take Two vs. Paycom Software |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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