Correlation Between Take Two and Leonardo SpA
Can any of the company-specific risk be diversified away by investing in both Take Two and Leonardo SpA 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 Leonardo SpA 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 Leonardo SpA ADR, you can compare the effects of market volatilities on Take Two and Leonardo SpA 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 Leonardo SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Leonardo SpA.
Diversification Opportunities for Take Two and Leonardo SpA
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Take and Leonardo is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Leonardo SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonardo SpA ADR 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 Leonardo SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonardo SpA ADR has no effect on the direction of Take Two i.e., Take Two and Leonardo SpA go up and down completely randomly.
Pair Corralation between Take Two and Leonardo SpA
Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 0.95 times more return on investment than Leonardo SpA. However, Take Two Interactive Software is 1.05 times less risky than Leonardo SpA. It trades about 0.32 of its potential returns per unit of risk. Leonardo SpA ADR is currently generating about 0.22 per unit of risk. If you would invest 16,289 in Take Two Interactive Software on August 31, 2024 and sell it today you would earn a total of 2,267 from holding Take Two Interactive Software or generate 13.92% return on investment 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. Leonardo SpA ADR
Performance |
| Timeline |
| Take Two Interactive |
| Leonardo SpA ADR |
Take Two and Leonardo SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Leonardo SpA
The main advantage of trading using opposite Take Two and Leonardo SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Leonardo SpA 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 Leonardo SpA will offset losses from the drop in Leonardo SpA's long position.| Take Two vs. Nintendo Co ADR | Take Two vs. NetEase | Take Two vs. Playtika Holding Corp | Take Two vs. Electronic Arts |
| Leonardo SpA vs. Leonardo Spa | Leonardo SpA vs. Thales SA ADR | Leonardo SpA vs. Safran SA | Leonardo SpA vs. Rheinmetall AG ADR |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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