Correlation Between Take Two and Western Union
Can any of the company-specific risk be diversified away by investing in both Take Two and Western Union 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 Western Union 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 Western Union, you can compare the effects of market volatilities on Take Two and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Western Union.
Diversification Opportunities for Take Two and Western Union
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Take and Western is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Take Two i.e., Take Two and Western Union go up and down completely randomly.
Pair Corralation between Take Two and Western Union
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.92 times more return on investment than Western Union. However, Take Two Interactive Software is 1.08 times less risky than Western Union. It trades about -0.03 of its potential returns per unit of risk. The Western Union is currently generating about -0.05 per unit of risk. If you would invest 28,476 in Take Two Interactive Software on October 12, 2024 and sell it today you would lose (343.00) from holding Take Two Interactive Software or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Take Two Interactive Software vs. The Western Union
Performance |
| Timeline |
| Take Two Interactive |
| Western Union |
Take Two and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Western Union
The main advantage of trading using opposite Take Two and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union's long position.| Take Two vs. Fresenius Medical Care | Take Two vs. Medical Properties Trust, | Take Two vs. Marvell Technology | Take Two vs. Guidewire Software, |
| Western Union vs. Take Two Interactive Software | Western Union vs. Cognizant Technology Solutions | Western Union vs. Marvell Technology | Western Union vs. Micron Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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