Correlation Between Take Two and Tyson Foods

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

Diversification Opportunities for Take Two and Tyson Foods

0.48

Correlation Coefficient

Take Two  Tyson Foods

Very weak diversification

The 3 months correlation between Take and Tyson is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Tyson Foods Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods Cl 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods Cl has no effect on the direction of Take Two i.e., Take Two and Tyson Foods go up and down completely randomly.

Pair Corralation between Take Two and Tyson Foods

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.55 times more return on investment than Tyson Foods. However, Take Two is 1.55 times more volatile than Tyson Foods Cl. It trades about -0.05 of its potential returns per unit of risk. Tyson Foods Cl is currently generating about -0.56 per unit of risk. If you would invest  18,547  in Take Two Interactive Software on October 11, 2024 and sell it today you would lose (338.00) from holding Take Two Interactive Software or give up 1.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Take Two Interactive Software  vs.  Tyson Foods Cl

Take Two Interactive

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 14 (%) 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.

Tyson Foods Cl

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Take Two and Tyson Foods

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

The idea behind Take Two Interactive Software and Tyson Foods Cl 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 Commodity Directory module to find actively traded commodities issued by global exchanges.