Correlation Between Take Two and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Take Two and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Take Two and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Scandic Hotels.
Diversification Opportunities for Take Two and Scandic Hotels
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Take and Scandic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Take Two i.e., Take Two and Scandic Hotels go up and down completely randomly.
Pair Corralation between Take Two and Scandic Hotels
Assuming the 90 days trading horizon Take Two is expected to generate 1.37 times less return on investment than Scandic Hotels. In addition to that, Take Two is 1.66 times more volatile than Scandic Hotels Group. It trades about 0.14 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.31 per unit of volatility. If you would invest 6,845 in Scandic Hotels Group on December 2, 2024 and sell it today you would earn a total of 1,555 from holding Scandic Hotels Group or generate 22.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Take Two Interactive Software vs. Scandic Hotels Group
Performance |
Timeline |
Take Two Interactive |
Scandic Hotels Group |
Take Two and Scandic Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Take Two and Scandic Hotels
The main advantage of trading using opposite Take Two and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.Take Two vs. UNIQA Insurance Group | Take Two vs. Ebro Foods | Take Two vs. JLEN Environmental Assets | Take Two vs. Ecclesiastical Insurance Office |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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