Correlation Between Take Two and Phillips
Can any of the company-specific risk be diversified away by investing in both Take Two and Phillips 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 Phillips 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 Phillips 66, you can compare the effects of market volatilities on Take Two and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Phillips.
Diversification Opportunities for Take Two and Phillips
Poor diversification
The 3 months correlation between Take and Phillips is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Take Two i.e., Take Two and Phillips go up and down completely randomly.
Pair Corralation between Take Two and Phillips
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.01 times more return on investment than Phillips. However, Take Two is 1.01 times more volatile than Phillips 66. It trades about 0.09 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.07 per unit of risk. If you would invest 19,456 in Take Two Interactive Software on September 14, 2024 and sell it today you would earn a total of 8,992 from holding Take Two Interactive Software or generate 46.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 67.6% |
| Values | Daily Returns |
Take Two Interactive Software vs. Phillips 66
Performance |
| Timeline |
| Take Two Interactive |
| Phillips 66 |
Take Two and Phillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Phillips
The main advantage of trading using opposite Take Two and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' long position.| Take Two vs. Taiwan Semiconductor Manufacturing | Take Two vs. Zoom Video Communications | Take Two vs. Spotify Technology SA | Take Two vs. G2D Investments |
| Phillips vs. Marathon Petroleum | Phillips vs. Valero Energy | Phillips vs. Cosan SA | Phillips vs. Refinaria de Petrleos |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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