Correlation Between Take Two and East Japan
Can any of the company-specific risk be diversified away by investing in both Take Two and East Japan 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 East Japan 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 East Japan Railway, you can compare the effects of market volatilities on Take Two and East Japan 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 East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and East Japan.
Diversification Opportunities for Take Two and East Japan
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Take and East is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway 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 East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of Take Two i.e., Take Two and East Japan go up and down completely randomly.
Pair Corralation between Take Two and East Japan
Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 1.36 times more return on investment than East Japan. However, Take Two is 1.36 times more volatile than East Japan Railway. It trades about 0.38 of its potential returns per unit of risk. East Japan Railway is currently generating about -0.31 per unit of risk. If you would invest 16,126 in Take Two Interactive Software on August 25, 2024 and sell it today you would earn a total of 2,689 from holding Take Two Interactive Software or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Take Two Interactive Software vs. East Japan Railway
Performance |
| Timeline |
| Take Two Interactive |
| East Japan Railway |
Take Two and East Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and East Japan
The main advantage of trading using opposite Take Two and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, East Japan 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 East Japan will offset losses from the drop in East Japan's long position.| Take Two vs. Nintendo Co ADR | Take Two vs. NetEase | Take Two vs. Playtika Holding Corp | Take Two vs. Electronic Arts |
| East Japan vs. Central Japan Railway | East Japan vs. LB Foster | East Japan vs. Canadian National Railway | East Japan vs. West Japan Railway |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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