Correlation Between Take-Two Interactive and Nintendo
Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and Nintendo 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 Nintendo 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 Nintendo Co, you can compare the effects of market volatilities on Take-Two Interactive and Nintendo 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 Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and Nintendo.
Diversification Opportunities for Take-Two Interactive and Nintendo
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Take-Two and Nintendo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and Nintendo go up and down completely randomly.
Pair Corralation between Take-Two Interactive and Nintendo
Assuming the 90 days horizon Take Two Interactive Software is expected to generate 1.11 times more return on investment than Nintendo. However, Take-Two Interactive is 1.11 times more volatile than Nintendo Co. It trades about 0.08 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.05 per unit of risk. If you would invest 9,247 in Take Two Interactive Software on September 12, 2024 and sell it today you would earn a total of 8,347 from holding Take Two Interactive Software or generate 90.27% 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. Nintendo Co
Performance |
| Timeline |
| Take Two Interactive |
| Nintendo |
Take-Two Interactive and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take-Two Interactive and Nintendo
The main advantage of trading using opposite Take-Two Interactive and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take-Two Interactive position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| Take-Two Interactive vs. NEXON Co | Take-Two Interactive vs. Superior Plus Corp | Take-Two Interactive vs. SIVERS SEMICONDUCTORS AB | Take-Two Interactive vs. Norsk Hydro ASA |
| Nintendo vs. Hyrican Informationssysteme Aktiengesellschaft | Nintendo vs. MICRONIC MYDATA | Nintendo vs. INFORMATION SVC GRP | Nintendo vs. Datang International Power |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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