Correlation Between Take-Two Interactive and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and Clean Energy 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 Clean Energy 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 Clean Energy Fuels, you can compare the effects of market volatilities on Take-Two Interactive and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and Clean Energy.
Diversification Opportunities for Take-Two Interactive and Clean Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Take-Two and Clean is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and Clean Energy go up and down completely randomly.
Pair Corralation between Take-Two Interactive and Clean Energy
Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.49 times more return on investment than Clean Energy. However, Take Two Interactive Software is 2.02 times less risky than Clean Energy. It trades about 0.07 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.02 per unit of risk. If you would invest 9,614 in Take Two Interactive Software on August 28, 2024 and sell it today you would earn a total of 8,326 from holding Take Two Interactive Software or generate 86.6% 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. Clean Energy Fuels
Performance |
| Timeline |
| Take Two Interactive |
| Clean Energy Fuels |
Take-Two Interactive and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take-Two Interactive and Clean Energy
The main advantage of trading using opposite Take-Two Interactive and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take-Two Interactive position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.The idea behind Take Two Interactive Software and Clean Energy Fuels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. Origin Agritech | Clean Energy vs. SIVERS SEMICONDUCTORS AB |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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