Correlation Between Take-Two Interactive and Air Canada
Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and Air Canada 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 Interactive and Air Canada 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 Air Canada, you can compare the effects of market volatilities on Take-Two Interactive and Air Canada 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 Interactive with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and Air Canada.
Diversification Opportunities for Take-Two Interactive and Air Canada
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Take-Two and Air is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Take-Two Interactive 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 Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and Air Canada go up and down completely randomly.
Pair Corralation between Take-Two Interactive and Air Canada
Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.48 times more return on investment than Air Canada. However, Take Two Interactive Software is 2.1 times less risky than Air Canada. It trades about -0.06 of its potential returns per unit of risk. Air Canada is currently generating about -0.29 per unit of risk. If you would invest 17,870 in Take Two Interactive Software on October 17, 2024 and sell it today you would lose (294.00) from holding Take Two Interactive Software or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. Air Canada
Performance |
| Timeline |
| Take Two Interactive |
| Air Canada |
Take-Two Interactive and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take-Two Interactive and Air Canada
The main advantage of trading using opposite Take-Two Interactive and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take-Two Interactive position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Take-Two Interactive vs. JD SPORTS FASH | Take-Two Interactive vs. MINCO SILVER | Take-Two Interactive vs. De Grey Mining | Take-Two Interactive vs. Yanzhou Coal Mining |
| Air Canada vs. X FAB Silicon Foundries | Air Canada vs. Take Two Interactive Software | Air Canada vs. Pure Storage | Air Canada vs. SILVER BULLET DATA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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