Correlation Between Take Two and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both Take Two and MercadoLibre 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 MercadoLibre 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 MercadoLibre, you can compare the effects of market volatilities on Take Two and MercadoLibre 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 MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and MercadoLibre.
Diversification Opportunities for Take Two and MercadoLibre
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Take and MercadoLibre is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre 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 MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of Take Two i.e., Take Two and MercadoLibre go up and down completely randomly.
Pair Corralation between Take Two and MercadoLibre
Assuming the 90 days trading horizon Take Two is expected to generate 5.09 times less return on investment than MercadoLibre. In addition to that, Take Two is 1.4 times more volatile than MercadoLibre. It trades about 0.03 of its total potential returns per unit of risk. MercadoLibre is currently generating about 0.22 per unit of volatility. If you would invest 8,540 in MercadoLibre on October 20, 2024 and sell it today you would earn a total of 740.00 from holding MercadoLibre or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Take Two Interactive Software vs. MercadoLibre
Performance |
| Timeline |
| Take Two Interactive |
| MercadoLibre |
Take Two and MercadoLibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and MercadoLibre
The main advantage of trading using opposite Take Two and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.| Take Two vs. Delta Air Lines | Take Two vs. Eastman Chemical | Take Two vs. MAHLE Metal Leve | Take Two vs. Vulcan Materials |
| MercadoLibre vs. Unity Software | MercadoLibre vs. MAHLE Metal Leve | MercadoLibre vs. Spotify Technology SA | MercadoLibre vs. Take Two Interactive 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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