Correlation Between Take Two and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both Take Two and SIMS METAL 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 SIMS METAL 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 SIMS METAL MGT, you can compare the effects of market volatilities on Take Two and SIMS METAL 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 SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and SIMS METAL.
Diversification Opportunities for Take Two and SIMS METAL
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Take and SIMS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT 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 SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Take Two i.e., Take Two and SIMS METAL go up and down completely randomly.
Pair Corralation between Take Two and SIMS METAL
Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.85 times more return on investment than SIMS METAL. However, Take Two Interactive Software is 1.17 times less risky than SIMS METAL. It trades about 0.07 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.0 per unit of risk. If you would invest 10,358 in Take Two Interactive Software on September 1, 2024 and sell it today you would earn a total of 7,540 from holding Take Two Interactive Software or generate 72.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. SIMS METAL MGT
Performance |
| Timeline |
| Take Two Interactive |
| SIMS METAL MGT |
Take Two and SIMS METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and SIMS METAL
The main advantage of trading using opposite Take Two and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.| Take Two vs. Nintendo Co | Take Two vs. Sea Limited | Take Two vs. Superior Plus Corp | Take Two vs. NMI Holdings |
| SIMS METAL vs. Martin Marietta Materials | SIMS METAL vs. Hyster Yale Materials Handling | SIMS METAL vs. Plastic Omnium | SIMS METAL vs. MGIC INVESTMENT |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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