Correlation Between Take Two and CVR Energy

Can any of the company-specific risk be diversified away by investing in both Take Two and CVR 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 and CVR 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 CVR Energy, you can compare the effects of market volatilities on Take Two and CVR 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 with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and CVR Energy.

Diversification Opportunities for Take Two and CVR Energy

-0.73

Correlation Coefficient

Take Two  CVR Energy

Pay attention - limited upside

The 3 months correlation between Take and CVR is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy 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 CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Take Two i.e., Take Two and CVR Energy go up and down completely randomly.

Pair Corralation between Take Two and CVR Energy

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.31 times more return on investment than CVR Energy. However, Take Two Interactive Software is 3.17 times less risky than CVR Energy. It trades about 0.23 of its potential returns per unit of risk. CVR Energy is currently generating about 0.0 per unit of risk. If you would invest  15,469  in Take Two Interactive Software on September 12, 2024 and sell it today you would earn a total of  3,559  from holding Take Two Interactive Software or generate 23.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Take Two Interactive Software  vs.  CVR Energy

Take Two Interactive

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CVR Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Take Two and CVR Energy

The main advantage of trading using opposite Take Two and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, CVR 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 CVR Energy will offset losses from the drop in CVR Energy's long position.

The idea behind Take Two Interactive Software and CVR Energy 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.

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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.