Correlation Between Take Two and New Residential
Can any of the company-specific risk be diversified away by investing in both Take Two and New Residential 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 New Residential 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 New Residential Investment, you can compare the effects of market volatilities on Take Two and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and New Residential.
Diversification Opportunities for Take Two and New Residential
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Take and New is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Take Two i.e., Take Two and New Residential go up and down completely randomly.
Pair Corralation between Take Two and New Residential
Assuming the 90 days horizon Take Two is expected to generate 3.67 times less return on investment than New Residential. In addition to that, Take Two is 1.18 times more volatile than New Residential Investment. It trades about 0.09 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.38 per unit of volatility. If you would invest 1,020 in New Residential Investment on October 24, 2024 and sell it today you would earn a total of 86.00 from holding New Residential Investment or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. New Residential Investment
Performance |
| Timeline |
| Take Two Interactive |
| New Residential Inve |
Take Two and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and New Residential
The main advantage of trading using opposite Take Two and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Take Two vs. AECOM TECHNOLOGY | Take Two vs. CLOVER HEALTH INV | Take Two vs. SMA Solar Technology | Take Two vs. Kingdee International Software |
| New Residential vs. STORE ELECTRONIC | New Residential vs. Renesas Electronics | New Residential vs. SIERRA METALS | New Residential vs. Osisko Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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