Correlation Between Take Two and CATLIN GROUP

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

Diversification Opportunities for Take Two and CATLIN GROUP

-0.87

Correlation Coefficient

Take Two  CATLIN GROUP

Pay attention - limited upside

The 3 months correlation between Take and CATLIN is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN 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 CATLIN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATLIN GROUP has no effect on the direction of Take Two i.e., Take Two and CATLIN GROUP go up and down completely randomly.

Pair Corralation between Take Two and CATLIN GROUP

Assuming the 90 days trading horizon Take Two Interactive Software is expected to under-perform the CATLIN GROUP. In addition to that, Take Two is 4.82 times more volatile than CATLIN GROUP . It trades about -0.14 of its total potential returns per unit of risk. CATLIN GROUP is currently generating about -0.22 per unit of volatility. If you would invest  9,500  in CATLIN GROUP on September 24, 2024 and sell it today you would lose (100.00) from holding CATLIN GROUP or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Take Two Interactive Software  vs.  CATLIN GROUP

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.

CATLIN GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CATLIN GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Take Two and CATLIN GROUP

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

The idea behind Take Two Interactive Software and CATLIN GROUP 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 Anywhere module to track or share privately all of your investments from the convenience of any device.