Correlation Between Take-Two Interactive and Nike
Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Take-Two Interactive and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and Nike.
Diversification Opportunities for Take-Two Interactive and Nike
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Take-Two and Nike is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and Nike go up and down completely randomly.
Pair Corralation between Take-Two Interactive and Nike
Assuming the 90 days horizon Take-Two Interactive is expected to generate 3.1 times less return on investment than Nike. But when comparing it to its historical volatility, Take Two Interactive Software is 1.46 times less risky than Nike. It trades about 0.1 of its potential returns per unit of risk. Nike Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6,938 in Nike Inc on September 20, 2024 and sell it today you would earn a total of 517.00 from holding Nike Inc or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. Nike Inc
Performance |
| Timeline |
| Take Two Interactive |
| Nike Inc |
Take-Two Interactive and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take-Two Interactive and Nike
The main advantage of trading using opposite Take-Two Interactive and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take-Two Interactive position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Take-Two Interactive vs. INTER CARS SA | Take-Two Interactive vs. Canon Marketing Japan | Take-Two Interactive vs. COMMERCIAL VEHICLE | Take-Two Interactive vs. FLOW TRADERS LTD |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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