Correlation Between Take-Two Interactive and ATT
Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and ATT 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 ATT 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 ATT Inc, you can compare the effects of market volatilities on Take-Two Interactive and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and ATT.
Diversification Opportunities for Take-Two Interactive and ATT
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Take-Two and ATT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and ATT go up and down completely randomly.
Pair Corralation between Take-Two Interactive and ATT
Assuming the 90 days horizon Take Two Interactive Software is expected to generate 1.39 times more return on investment than ATT. However, Take-Two Interactive is 1.39 times more volatile than ATT Inc. It trades about -0.01 of its potential returns per unit of risk. ATT Inc is currently generating about -0.19 per unit of risk. If you would invest 17,786 in Take Two Interactive Software on October 10, 2024 and sell it today you would lose (82.00) from holding Take Two Interactive Software or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. ATT Inc
Performance |
| Timeline |
| Take Two Interactive |
| ATT Inc |
Take-Two Interactive and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take-Two Interactive and ATT
The main advantage of trading using opposite Take-Two Interactive and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take-Two Interactive position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Take-Two Interactive vs. LOANDEPOT INC A | Take-Two Interactive vs. Meiko Electronics Co | Take-Two Interactive vs. Electronic Arts | Take-Two Interactive vs. STMicroelectronics NV |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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